Realtime Day Trading Trends and Signals - 01-20-2015

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...
Friday''s expiration had recovered from probing fresh lows overnight down to 1970.00. Extending the recovery wasn''t embraced initially, but a rally eventually got underway to test 2005.00. Friday''s late-afternoon surge tested 2014.00.

Overnight action''s new info...
Sunday night soon extended that nearly 10 points to attack 2024.00. Crashing China stocks were the catalyst for a pullback to Monday morning''s 2003.00 low. That has now been recovered entirely to test and retest 2024.00 by 3 ticks.

If, then...
WedEX''s bearish influence might have been responsible for how late Friday afternoon''s ranging finally broke higher, but that has since extended. Friday afternoon''s ranging formed a Symmetrical Triangle whose breakout might be false, and preparing to reverse down more substantially -- exceeding Sunday night''s highs through this morning''s open would avoid that. Extreme optimism is being tested now, with MS just moments ago joining last week''s earnings misses by BAC, JPM and GS. Of course, the previous misses helped to cushion the MS reaction, and now the biggest investment banks'' earnings are all history.

First Trade...
Exiting the open at 9:45 back under 2018.75 would be unlikely to exceed the 2022.75 bias-up target through 10:15, which would avoid renewing the bias-up signal. Back under 2012.25 would be unlikely to trigger the 2016.50 bias-up signal, putting into play tests of both bias-down parameters. 

Optimistic, to the very last drop.

After Sunday night''s 2023.75 high had dipped to Monday morning''s 2003.00 low, Tuesday''s pre-open recovery extended to 2026.50. Dipping back under the 2021.50 and 2018.75 pullback limits started signaling momentum was reversing down. 

Reversing down was not assured, because the pullback limits were being probed pre-open. They were taken more seriously when a post-open bounce reacted down from touching this morning''s 2022.75 bias-up target as resistance.

Rejecting tests of both bias-up parameters put into play tests of both bias-down parameters -- both the 2016.50 bias-down signal and the 2001.00 bias-down target. The latter was just attacked to within 1 tick.

Bearish WedEX? Not, yet. This has only retraced Friday''s late-afternoon rally. Retracing Friday afternoon''s 1997.00 low still would not fulfill a bearish WedEX. Maybe another 10 points lower.

Anyway, the reaction up from attacking 2001.00 could signal momentum reversing up by exiting the bias environment at 11:30 back above its 2007.50 bias-down signal. Meanwhile, back under 2003.00 would open the door to extending the decline this morning.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2016.50
2010.25
...would target 2021.75
2015.50
Bias-down: under 2001.25
1995.00
...would target 1994.75
1988.50
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.

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))
Holiday strength was pushed back through Tuesday, but only to correct the rally from Friday''s low. Closing above 1.1595 would signal a rally leg underway, targeting 1.1785 and 1.2000.

Gold Feb Contract (GC, ETF: (GLD))
Firming into week''s end didn''t extend meaningfully until Tuesday surged through 1287.70 to attack 1300.00. The rally is extended, but its momentum remains intact so long 1285.70 holds as support. But there is room down to 1266.50-1269.00 before actually signaling momentum is reversing down.

Silver Mar Contract (SI, ETF: (SLV))
Rallying to 18.00.now requires that pullbacks hold 17.65 to maintain the rally''s momentum. 

30-year Treasury Mar Contract (US, ETF: (TLT))
Narrow sideways ranging through the holiday did blip-up Tuesday morning, but stopped 61.8{faed0d6dca04cec8b6b7985efddb9b0651107a3aebb05f69f0166038b8c951f6} of the way back to last week''s test of the 150-08 bounce limit''s resistance at 150-16. Any higher would suggest the rally remains intact and next targeting 150-28. The earliest sell signal at this stage would be triggered by losing back under 149-14.

Crude Oil Mar Contract (CL, ETF: (USO))
Opening Tuesday back under 47.80 (basis Mar, 47.45 basis Feb) extended down only briefly and only a little. The balance of the session ranged narrowly sideways, but didn''t trend down. So long as 46.20 holds as support, back above 49.00 would launch a new rally leg. Having said that, taking much longer to recover becomes increasingly vulnerable to resuming the decline.

Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Backing-and-filling persisted through the holiday, neutralizing all lower attractions so that another buy signal could be introduced back above 2.98.

If Wednesday''s open doesn''t gap down under relevant support... then the morning should be very productive to the upside. The afternoon might hesitate, or run into trouble, ahead of the ECB policy statement.

Pattern points... (Setups and technicals)
Tuesday afternoon''s rally gained traction for its effort. The bias environment was exited above the noon hour''s high, and the final hour was entered higher. Typically, the reward to Tuesday''s buyers is control of the next morning''s bias environment. 

Trending higher Wednesday morning can be invalidated by gapping down sufficiently. A pullback has room down to 2009.50 before suggesting the recovery''s momentum is losing traction.

An overnight dip can''t be discounted, but it isn''t required. The current environment''s optimism remains in-check -- the afternoon''s recovery peaked pessimistically1 tick short of touching natural resistance at the 2020.00 open''s gap, and that reacted down in two pre-close dips.

None of which interferes with this rally still being only a temporary correction. "Temporary" doesn''t speak to duration, only to durability -- last week''s lows will need to be retested, not for the sake of retesting them, but because they lacked integrity for forming a durable bottom.

What''s Next... (Outlook and opportunities)
The annual State of the Union address has no bearing on the market. But it has distracted attention from the BOJ policy statement due overnight.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2025.00
2018.75
...would target 2031.50
2025.25
Bias-down: under 2015.75
2009.50
...would target 2009.25
2003.00
Signal status: LATE BIAS-UP, TESTED  BIAS-DOWN 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.