Real Time Stock Market Trade Signals - 02-25-2015

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

Enter the Chartroom here (pre-open Market Tour begins at 8:55 ET)

Through the prior close...
Tuesday''s open had initially been resisted by its 2108.50 bias-up signal, which was also the prior high. Breaking above it before the first hour ended was rewarded by a new high testing the morning''s 2114.00 bias-up target. After the noon hour''s momentary probe back under prior highs, the afternoon''s higher high at 2115.25 fulfilled the session''s highest calculable target. The rally didn''t gain traction despite spending so much time probing new highs, because the close had dipped to overlap the morning''s high.

Overnight action''s new info...
Tuesday''s closing dip continued dipping, most recently touching 2110.00 amid Germany-second-guessing-Greece headlines.

If, then...
Most or all relevant time Tuesday was spent above prior highs, without gaining traction for the effort. This was the current rally leg''s first instance of these conditions. If they were more pronounced without any intraday dip under prior highs, a reversal down would be imminent. Instead, a second occurrence of these conditions within 2-3 days is still needed. Interim trending should be muted, or else a much bigger rally leg would actually be underway.

First Trade...
Exiting the open at 9:45 under 2104.25 would be likely also to trigger the 2107.25 bias-down signal at 10:15. Exiting the open under 2109.00 would at least be unlikely to recover in time to trigger bias-up.

Sellers stymied.

Extending the relentless overnight decline required breaking under its low at a steeper slope. Despite a 1-point blip-up from the 2111.75 open, the 2110.00 overnight low was soon probed by more than 1 point.

But the 2111.75 open was retested. And it wasn''t quite rejected after the 10:00 news, let alone by 10:15.

Neither bias signal was tested or triggered, and neither bias signal requires an offsetting test. Sellers didn''t maintain their aggression, but neither were they rejected. 

Sellers aren''t likely to launch a durable drop, but could still produce fresh lows, perhaps testing the 2107.25 bias-down signal. A rally has potential up to the 2115.25 bias-up signal. But without being likely to trend this morning at all, waiting patientialy to trade a trending attempt may be more productive.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2117.50
2115.25
...would target 2124.25
2122.00
Bias-down: under 2111.50
2109.25
...would target 2105.50
2103.25
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.

A daily summary of high-profile members of several complexes... View a more detailed discussion of each chart at the end of today''s Market Wrap.

Eurodollar Mar Contract (EC, ETF: (FXE))
Firming into Wednesday''s open didn''t extend higher intraday, but it did avoid resuming the decline for a second consecutive session. Early strength Thursday would be credible for extending higher intraday.

Gold Apr Contract (GC, ETF: (GLD))
Recovering repeatedly back above 1197.50 from tests of the decline''s 1191.50 target has been signaling the decline has ended. Trying to reverse up prematurely back above 1212.00 would only make a fresh low at 1185.00 likely. Tuesday night''s bounce did attack 1212.00 but dipped back down to within $1 of Tuesday''s close 1199.50 to temper the enthusiasm.

Silver Mar Contract (SI, ETF: (SLV))
Already gapping up Wednesday was premature for reversing even near-term momentum back up, and it left a gap outstanding back to Tuesday''s close that should be filled.

30-year Treasury Mar Contract (US, ETF: (TLT))
Fresh highs Tuesday night attacked the corrective bounce target''s 147-00 upper-end to within a quarter-point. It was eventually retested Wednesday afternoon, absorbing a couple of intraday dips to suggest the bounce isn''t just a temporary correction.

Crude Oil Apr Contract (CL, ETF: (USO, UWTI))
Wednesday''s EIA report triggered a blip-down under the 49.00-50.50 rock and hard place that quickly reacted back up into the narrow range. Its upper-end was probed. Surging back above 51.25-52.65 would be credible for resuming the rally, but that''s probably the only way to avoid a new downleg to new lows first.

Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Until closing above Tuesday afternoon''s high, pullbacks have room down to the 2.80 area before suggesting that a bigger rally leg might not be developing.

If the rally isn''t topping right now... then it''s preparing to get extend at an exponential pace. That wouldn''t change its ultimate resolution, but it would be a painful short.

Pattern points... (Setups and technicals)
You know that string of consecutive gaps down, all of which were absorbed intraday? They eventually got shallower and briefer, as their recoveries became more and more anticipated. Pavlov''s dogs used to do the same thing.

So, as the opening dips are bought up more eagerly, and that''s translated more regularly into a new high, eventually, their higher highs become unsustainable.

That happened Tuesday, to a small degree. Its afternoon new high failed to retrace above the morning''s new high. It happened again Wednesday, as its new high almost closed back under the morning''s low. In fact, Tuesday''s sequence required Wednesday to reject its 2117.75 new high. We were anticipating it. The only question was how, and by how much?

Okay, that''s two questions.

How: The bias environment was exited under the noon hour''s 2114.75 high, and the final hour was entered under the noon hour''s 2112.75 low.

How much: The morning''s 2108.75 low in negative territory was probed down to 2107.25.

New highs, and sellers gained traction. They also avoided closing under the morning''s high, which would have formed a very bearish "Pivot Reversal" setup. We also anticipated that wouldn''t happen, since this wasn''t the appropriate stage for "very" bearish. Sort of like the gaps down, also inappropriate to extend down.

But not for long. Trending down sharply Thursday morning after Tuesday and Wednesday''s sequence would be substantial, but not durable. That template is available, but more likely is another optimistic session that doesn''t gain traction for its effort..

What''s Next... (Outlook and opportunities)
Overbought RSIs at Wednesday''s 2117.75 high require its retest. Gapping up around 2115.00 and probing a fresh high would be optimal timing -- both intraday and day of week -- to begin trending back down into the weekend. Closing above Wednesday''s high would instead suggest the rally is instead extending to 2130-2140.

THU morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2117.25
2115.00
...would target 2122.50
2120.25
Bias-down: under 2108.50
2106.25
...would target 2103.75
2101.50
Signal status: NOn-BIAS, TESTED BIAS-DOWN
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.