Real Time Stock Market Trade Signals - 01-12-2016

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

CHARTROOM LINK <<==click here (pre-open Market Tour begins at 8:55 ET)

Through the prior close... Plunging about 20 points to 1893.50 at Sunday night's open had recovered enough to gap up Monday and touch 1929.00. Selling resumed immediately, extending down through the noon hour. The slide ended abruptly after the noon hour upon only barely piercing the overnight low by 1 point. The noon hour's 1905.50 low was recovered by just enough just in time to prevent sellers from gaining traction. Sellers also failed to gain traction from a steep drop through the 3:10-3:20 timing window that avoided fresh lows. A surge to 1923.00 ended the day unchanged around 1914.00. Overnight action's new info... Monday's late dip back to unchanged eventually extended down another 14 points to 1899.00. Sympathy for Chinese stocks falling was leveraged by concern for Crude Oil that was probing fresh lows. This morning's bias-down target happens to be 1899.00, and its reaction extended up to 1912.00 through Europe's opens. Crude Oil reversed up after a terrorist event in Istanbul triggered a surge that probed yesterday's opening high to attack 1931.00. If, then... Monday afternoon's low was on the precipice of the precipice. Retesting Sunday night's low had room below for another 11 points down to 1881.00. The afternoon's surge's appearance was very timely, as any lower any later would have pierced an air pocket below. And now another precipice overnight has been recovered from 1899.00 to probe 2 points above Monday morning's 1929.00 high. It should be noted that Crude Oil is the overnight recovery's fickle catalyst. Already being oversold from China helped, and from remaining stable through Europe's opens. While nothing about the pattern suggests it is becoming a durable bottom, sudden pre-expiration detours  can have a dizzying effect. Above 1933.50 could extend to 1948.00 or even to 1975.00 -- briefly, and temporarily, but steeply -- before another downleg can gain traction. Otherwise, stomping immediately Tuesday on overnight optimism could resume the work of Monday morning's sell-off. First Trade... Exiting the open at 9:45 above 1929.00 would be likely also to trigger the 1927.25 bias-up signal at 10:15. Exiting the open under 1921.00 would be unlikely to trigger bias-up.

Two optimists walk into a bar. The first one says, "Hey, where'd everybody go?" Another gap up? Another reversal back under the open? No learning curve is this slow. Expiration is coming, and the position-jockeying is ongoing. This morning's extension of the overnight rally didn't reject its test of 1938.00. But 1938.00 wasn't clearly recovered, and was  still being overlapped at 9:45. Its recovery offered a lot of reward -- Christmas in January. But its reaction down is testing 1918.00.

20 points of the high is a lot of selling. Even more so -- that comes after testing what would have been the renewed bias-up target at 1938.75, back under the 1933.50 bias-up target, and not yet rejecting the 1927.25 bias-up signal at 10:15.

It's rare enough to reject tests of both bias parameters through 10:15. Rejecting them AND their renewed bias-up target is unlikely. In fact, the bias-up signal wasn't rejected. It was being overlapped at both 10:15 and 10:30 to trigger noN-bias. A simple correction still has room down to 1912.00 or 1907.00 before suggesting the decline has resumed. This post-open dip can resume the decline since the open didn't gain traction. Entering or exiting the noon hour above a prior high would suggest the post-open dip was just a correction, after all.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  1931.75 1924.75 ...would target  1937.50  1930.50 Bias-down: under  1919.75  1912.75 ...would target 1913.25  1906.25 Signal status: NO-BIAS, TESTED BIAS-DOWN SIGNAL 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.

Afternoon digestion. The post-open rally to 1940.00 has reversed down considerably. Not only in terms of size for dropping 31 points down to 1909.00, but also in relative terms for dipping well back into yesterday's range. Neither of those measurements disqualifies the drop from being only a temporary correction. Room down to 1912.00 has held through every relevant timing window. Its support was tested as long as possible, and then longer, triggering noN-bias for this afternoon's bias environment. This morning's noN-bias environment wasn't likely to sit still since it was triggered from so far above. This afternoon's noN-bias environment should be more subdued -- still choppy, but ranging around 1912.00 instead of trending away from it. When the bias environment is within view of lapsing, trending either way would be credible for extending in that direction.

Tuesday afternoon's short-squeeze setup wasn't exploited immediately. But it was exploited thoroughly. Fresh lows testing 1907.00-1912.00 support were isolated to the bias environment, and the final hour was entered above the ~1919.50 bias environment highs. But it was the 3:10-3:20 window that surged. The 3:10-3:20 window surging to fresh highs also confirmed the traction gained by entering the final hour above the bias environment's high. Although vulnerable to inverting down, Wednesday morning is due to reward Tuesday's rally for having gained traction. Inverting down must be signaled. But the signal is made possible by Tuesday afternoon's rally having met and held resistance at 1933.50. A catalyst has already appeared, with Iran capturing US sailors.The reaction down is already testing 1922.00. Rejecting the short-squeeze's recovery would put into play a retest of the lows down to 1881.00-1885.00. There's no bearish reason to probe any higher first, which would next target 1948.00, potentially also 1975.00 and 1985.00. 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  1940.50 1933.50 ...would target 1946.00  1939.00 Bias-down: under  1933.50  1926.50 ...would target 1928.50  1921.50 Signal status: LATE NO-BIAS, BOTH BIAS-UP PARAMETERS TESTED 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.