Real Time Market Updates and Trade Signals - 10-04-2016

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... Monday's backing-and filling had begun abruptly by gapping down to several points to 2155.00. Extending further down tested relevant support back to Thursday's ~2147.50 close. The Rosh Hashanah holiday limited the sponsorship available for trending, so support held. Twice. Pessimism was the excuse for two timing windows reacting up shallowly through the close to attack 2156.00 -- "ineffectual pessimism." No unfinished business was left outstanding, and a hold-long setup was not compelling enough. Overnight action's new info... Barely probing higher and higher highs awaited Europe's opens, which blipped down momentarily to 2153.00. As if that had cleared the air, price soon rallied further to attack 2160.00. Stopping pessimistically short of Friday's cash session close has reacted down to attack 2153.00. If, then... Despite reacting down so deeply from the overnight fresh recovery high, Tuesday's session remains vulnerable to resuming the recovery, and much more aggressively than was Monday afternoon's firming. With participation somewhat normalized, probing above Friday's 2168.00 high would not be an unreasonable reward for unleashing the pent-up buying pressure. All of which relies on post-open action being higher, abruptly and with limited reaction down, if not also by gapping up. Otherwise, probing negative territory -- at all, let alone more than momentarily -- could at least probe well under Monday's low, regardless of its ultimate resolution. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 under 2153.25 would be unlikely to trigger the 2156.50 bias-up signal at 10:15. Exiting the open above 2159.00 would be likely to trigger bias-up.

Late sellers take a shot. Delaying a sell-off post-open would not preclude there being a sell-off. A lesser chance for a sell-off, but not full protection. And the longer that a sell-off were delayed, the likelier it would be recovered entirely, regardless of how shallow or deep. Initial strength did delay a sell-off. Opening at the 2156.50 bias-up signal and ranging around it created a sort of anchor. Before being able to extend higher, something sent price plunging 6 points under an inflection point at 2154.25. That soon extended to touch 2147.75.

Focus shifted quickly from testing the bias-up signal to testing the 2148.75 bias-down signal. It was overlapped within 3 minutes of the 10:15 bias timing window to invoke the grace period. Bouncing to 2151.00 and higher at 10:30 barely triggered a late no-bias.

This being a no-bias environment, albeit late, and despite already having tested the 2156.50 bias-up signal, an offsetting test of it was put into play. It was quickly tested. Meanwhile, this being a no-bias environment, the bias-up signal should define the range's upper-end if tested. Which it is, so far.

We come within view of the bias environment lapsing within a half-hour. Breaking higher then would be credible for extending. The only "unfinished business below" would be oversold RSIs at the low, but being created by a knee-jerk reaction to news or to rumors does undermine their attraction.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2159.75  2152.00 ...would target  2165.25  2158.00 Bias-down: under  2153.50 2146.25 ...would target  2148.00  2140.75 Signal status: BIAS-DOWN 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.

Choppy morning was only the half of it. Quickly recovering this morning's dive was limited to its 2156.50 bias-up signal, which needed to define the no-bias environment's upper-end. More than that, it pushed price back down to retest the initial dive's 2147.75 low. And lower, down to 2145.00. Still being a no-bias environment, and being under the 2148.75 bias-down signal, a recovery was required. Only back up to 2148.75 would have sufficed, but 2156.50 was retested. By then, the bias environment was starting to lapse, so probing above it was allowed. But not required. The noon hour settled back in around 2148.75. Not already recovering before the noon hour end came into view would be bearish. Retesting the morning's lows upon exiting the noon hour would be bearish. Both conditions were met, and to erase any doubt, the noon hour's exit slid to fresh lows at 2138.50. Bias-down triggered, its 2140.75 target was met, and the likelihood for retesting last week's lows down to 2138.00-2139.00 has been fulfilled. Oversold RSIs at the low undermine whether this dip can recover, but back above 2143.50 would get a benefit of the doubt. Otherwise, exiting the bias environment trending down could extending the drop into Thursday.

So, the big question on everyone's mind after Tuesday's slide to 2136.00 is whether the rally is salvageable. Even if only to retest last week's ~2169.00 high, which was within proximity of unfinished business above at 2175.50. Since the potential for a detour was 2138.00-2139.00, which was recovered through Tuesday's close, the answer is yes. Yes, the rally can be salvaged. But since the decline gained traction for its effort, all but requiring trending down deeper Wednesday morning... well, you can see the difficulty. There's a reason I call it "Wreversal Wednesday," for the session's propensity to reverse a seemingly morning trend through the afternoon. If there's an opportunity to salvage the rally from probing lower, then Wednesday's the day to do it. But not back in rally mode at Wednesday's close would suggest a much more bearish picture in-play. Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2155.00 2147.75 ...would target  2160.00  2153.00 Bias-down: under  2145.00  2138.00 ...would target 2140.25  2133.00 Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED 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.