Real Time Market Updates and Trade Signals - 08-12-2016

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK (pre-open Market Tour begins at 8:55 ET)

Through the prior close... Thursday's gap up to 2178.00-2179.00 was more successful than Wednesday's gap up to 2178.00-2179.00. Both probed lower soon after the open, but Thursday recovered above the overnight highs. And then to fresh highs. And finally to new highs. Wednesday had declined through much of the day without gaining traction, so it's interesting to note that it was followed by a rally. Thursday's rally, meanwhile, didn't gain traction, and created no higher attraction. Overnight action's new info... New highs, again, and still no overnight enthusiasm about it. Not even rejection, which at least would anticipate volatility. Thursday's late 5-point reaction down from 2185.50 didn't extend. But a 3-point range expanded to 4 points at Europe's opens, and is still trading flat with yesterday's close. That's just complacency, which is usually ended by exploding in one direction, or the other. If, then... Yesterday's late, momentary surge was well-positioned to extend higher on a short-squeeze. Quickly absorbing the inflection point instead and reacting down suggests very little short interest is available up here to be squeezed, at this stage of the rally. Which has been an ongoing characteristic during the past several weeks, whether immediate or delayed one day. Pessimistic shorts would be bullish from a contrarian perspective. So far, their absence.is more of a "sell strength" signal than an outright sell. This being a Friday, reversing down from another fresh high or just dropping would likely extend through the noon hour. By the same token, this being a Friday, another fresh high that does NOT quickly reverse down could drift higher into the weekend. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 above 2187.00 would be likely to trigger the 2185.50 bias-up signal at 10:15. Exiting the open under 2181.00 would be unlikely to trigger bias-up,

Gap down not extending. Not ,yet. The pre-open PPI reaction gapped down to the same 2178.00-2179.00 open of the prior two sessions. They had found sponsorship through the morning. Not today. The first minute blipped-down to 2176.75 and then bounced back up. Actually, "bounced back up" exaggerates things. Price has firmed choppily back up to 2181.00, still overlapping the open. So, the gap down may not have extended deeper, but it also isn't being rejected. Choppiness aside, the pattern should creep higher to 2183.00. That would overlap yesterday's cash session close by several ticks. The pattern's next leg should be much cleaner trending -- if not reversing to resume and extend the gap down as is likelier, then potentially drifting higher into the close.

FRI afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2187.25 2184.00 ...would target  2192.50  2189.50 Bias-down: under  2179.00  2176.00 ...would target 2174.00  2170.75 Signal status: NO-BIAS FAQ INTRO VIDEOS #1 and #2 1. At 1:20, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target. 2. Not triggering either bias signal at 1:20 would be "no-bias," and the bias signals should define the bias environment's range. -- A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias. 3. Touching the bias signal within 3 minutes either way of 1:20 would invoke a grace period through 1:30 to trigger a late signal. -- "Late" signals don't require testing the opposite bias signal, but it's still likely. 4. Still testing the bias signal at 1:30 after invoking the grace period would trigger "noN-bias," with no bias influence.

Impending illiqiudity can be a call to action. Gapping down to touch 2176.75 was retraced to its 2183.00 target. The gaps back to yesterday's closes were filled, and price immediately began reversing back down. Most of the bounce was returned already when the noon hour ended. Then a strong rig count sent price to fresh lows at 2175.50. This afternoon's 2176.00 bias-down signal magically reached out and stopped the slide short of 5 points. Its bounce has been shallow, but enough not to trigger bias-down. The bias environment lapsing will see existing sponsorship lose interest, and offer a window for new sponsorship to take control. Two days of impending illiquidity can force moments of clarity. Nothing requires the pattern to change from defending against a decline to promoting it, but breaking under 2176.00 would suggest that's happening anyway -- and in a very big way.

Friday held within Thursday's range. The entire session was within proximity of new highs, let alone a new trend high close. Bot exploiting the opportunity is not patience, not even on a Friday. No unfinished business was created, and none is left outstanding in this area, or above it -- only below. Details and other markets coverage are discussed in the post-market Wrap recording here.

Join us Saturday morning to look more closely at current patterns and their implications and potential paths, along with gaming out Sunday night and Monday morning strategies. We start at 9:30 am ET in the chaRTroom here.

MON morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2187.25 2184.00 ...would target  2192.75  2189.50 Bias-down: under 2178.25  2175.00 ...would target 2172.25  2169.00 Signal status: BIAS-UP FAQ INTRO VIDEOS #1 and #2 1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target. 2. Not triggering either bias signal at 10:15 would be "no-bias," and the bias signals should define the bias environment's range. -- A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias. 3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal. -- "Late" signals don't require testing the opposite bias signal, but it's still likely. 4. Still testing the bias signal at 10:30 after invoking the grace period would trigger "noN-bias," with no bias influence.