Real Time Market Updates and Trade Signals - 10-18-2016

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 open had recently recovered from Sunday night's slide to 2116.75, back up to unchanged at 2127.00. The open's blip-up to 2130.00 reacted down 9 points through the open. Its partial recovery was reversed down deeper to test 2118.00, and the balance of the session chopped its way slightly higher into the close. "Unfinished business" was left outstanding both above and below, at 2132.25 and 2116.00, respectively. Overnight action's new info... Monday's last late chop from 2119.00 up to 2124.00 was corrected immediately at the Globex open down to 2120.25. The balance of the night has trended up relentlessly to 2135.50, until a 4-point dip that is now trying to recover. If, then... Buyers didn't gain traction Monday, so rallying requires gapping up, above the morning's 2129.00-2130.00 highs. And also above 2132.25 if it is touched post-open. Touching it overnight doesn't yet invoke this requirement. And regardless of by how much it was pierced, rejecting its test through the open could slingshot the market back down -- under Monday's lows to retest Thursday's 2107.75 low down to at least 2105.00. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 above 2133.75 would be likely also to exceed the 2131.75 bias-up target at 10:15, renewing the bias-up signal and next targeting 2136.75. Exiting the open above 2128.00 would be likely at least to trigger the 2125.75 bias-up signal at 10:15.

Gap up becomes post-open dive that retraces half the overnight rally. The overnight rally had attacked 2140.00, and greeted the open less than 1 point lower. that's a lot of buying pressure, but was it too much to attract new sponsorship? Testing the 2137.00 prior high during the opening 15 minutes of volatility would soon tell us. That required exceeding it to indicate that the overnight rally's momentum remained intact. It wasn't. Reacting down under 2136.00 targeted 2132.50, which was soon tested down to the 2131.75 bias-up target. Consolidating there maintained the recovery above 2131.75 through 10:15 to renew the bias-up signal. Sounds bullish. Perhaps not. 2136.75 is the renewed bias-up target. It was already tested, so its retest isn't required. Back above 2132.50 (being tested now) would signal its test is underway. But back under 2130.00 first would suggest not. At least not until neutralizing oversold RSIs at the post-open low.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2145.50 2139.25 ...would target  2150.50  2144.50 Bias-down: under  2139.75 2133.75 ...would target 2133.75 2127.50 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.

Volatile session now catching its breath. 18 points were gained from yesterday's cash session close to the overnight high. More than half of it was retraced by the open's drop to yesterday morning's "lower prior highs" at 2129.00. And almost all of that drop has been recovered. Rallying back to 2138.50 at noon hovered, and dipped, while still trading just a two points lower two hour later. Stopping short of the 2139.00 high is pessimism. Not yet reversing down is "ineffectual pessimism." And pessimism is potentially bullish from a contrarian perspective. The afternoon's no-bias environment triggered without even touching either signal. Sponsorship is not involved. Narrow and/or directionless ranging is appropriate for this signal. Soon the no-bias environment will begin lapsing. Back above 2137.50 would target slightly higher highs around 2141.50. There is potential to extend even higher, but also vulnerability to reversing down sharply. Just dropping back under 2135.00 would suggest a drop is developing anyway.

Recovering almost all of Tuesday's post-open drop by noon was no small feat. Ten points down to 2129.00 in an hour, and almost 10 points up in 90 minutes back to 2138.50 -- after rallying 18 points overnight -- take a rest. Which the noon hour and afternoon's no-bias environment did, and it was a well-deserved rest, ranging narrowly between 2135.00-2137.50. The narrow ranging persisted halfway through the last 60-90 minutes, which was less deserved. The two prior timing windows hovered pessimistically short of simply touching the morning's high, let alone probing it or the 2139.75 pre-open high. So, eventually breaking lower came too late to be sponsored by strong hands. And the late break lower triggered a sell signal under 2135.00 that fulfilled its 2130.50 target. Weak-handed sellers, fulfilling their selling pressure. Gapping up Wednesday would be the appropriate start to resuming the rally. And after trending down into the close, gapping up above Tuesday afternoon's 2138.00 high would form a "session-long rally" setup. Not exploiting any of these otherwise bullish inputs would be as bearish as the pattern could have been bullish. Breaking under Tuesday morning's 2129.00 low would essentially resume the decline. 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  2142.75 2136.50 ...would target  2147.50  2141.50 Bias-down: under  2136.50  2130.50 ...would target 2131.50 2125.25 Signal status: NO-BIAS INVALIDATED, TESTED BIAS-UP SIGNAL 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.