Realtime Day Trading Trends and Signals - 02-15-2017

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

NEW DAILY SCHEDULE First, watch the pre-open Tour recording HERE <<== Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close... Tuesday broke two streaks. The first was not gapping up following three consecutive gaps up. But after holding a test of the 2321.50 bias-down signal down to 2319.75, Tuesday adhered religiously to this leg's daily tradition of extending to new highs into the afternoon. Objectives left outstanding from Monday and created Tuesday morning were all neutralized along the way up to the afternoon bias environment's 2335.25 peak. Surging into the fourth consecutive higher attacked 2338.00. Tuesday did break one other streak by leaving no "unfinished business above." Overnight action's new info... A quick pullback tested Tuesday afternoon's high as support down to 2334.25. Consolidating narrowly until a midnight surge probed new high at 2340.00. There was no complexity to the surge before it reacted back down under Tuesday's highs to within 2 ticks of the overnight low. If, then... Tuesday was the first session of this four-day rally to end in a short-squeeze. That's not a sell signal itself, but it does reflect a new degree of impatient buying, which suggests that optimism is getting excessive. The overnight surge did not qualify for requiring an intraday retest, but it is a new trend high, so exiting the open under the overnight low could launch a pullback. Temporary backing-and-filling has room down to 2327.00 and 2324.50 before suggesting something more substantial underway. Avoiding a pullback this morning and extending higher would next target 2343.00-2344.00, but remain vulnerable to the indications that momentum is weakening. Regardless, like yesterday, be careful not to rely on early price action persisting -- a lot is happening before 10:15, which I describe in today's Tour. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 above 2337.75 would be likely to trigger the 2336.50 bias-up signal at 10:15. Exiting the open under 2334.00 would be unlikely to trigger bias-up.

Pre-open dip stalls the rally. Yesterday's lower open was the rally's tool to replenish its energy. Holding a test of its bias-down signal through 10:15 had indicated that sellers were weak-handed -- impatient and ineffectual -- and trapped. Their scrambling to cover shorts or to re-buy helped to fuel the intraday recovery to new highs.

Yellen's congressional testimony helped, too. Anticipation for it to be repeated today is probably responsible to some degree for the overnight surge to 2340.00. Already having discounted that is probably also responsible to some degree for trending down before the open.

And like a swinging pendulum, retracing that discount allowed it to reappear as Yellen's appearance got closer.

In fact, the pre-open dip down to 2331.25 bounced through the opening 15 minutes of volatility to test the 2334.25 overnight high. Releasing her embargoed opening comments had no more bullish impact on prices, and the 2336.50 bias-up signal wasn't even touched. This is a no-bias environment. Neither bias signal requires being tested, because neither was tested already post-open. That isn't preventing a probe above the 2336.50 bias-up signal anyway. The open hovered at or under yesterday's 2335.50 cash session close, but didn't extend down. A bounce just touched 2338.00. It's origin makes it "no-bias trending" that is doomed to failure. That doesn't prevent a sizable detour to and/or through the 2340.00 overnight high to 2343.00-2344.00. Back under 2334.75 at this point would signal the 2336.50 bias-up signal's test had held. It wouldn't require trending down, since no offsetting test of the bias-down signal is required.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2344.25 2342.25 ...would target  2350.00  2348.25 Bias-down: under  2336.25  2334.50 ...would target 2331.25 2329.25 Signal status: NO-BIAS, TESTED BIAS-UP 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.

Trump picks up Yellen's slack to trigger surge. Great scene in Hunt for Red October, when it is saved from guided torpedoes by submarine Dallas attracting them away. President Trump played a similar role this morning by touting massive tax cuts, after Yellen's comments fell flat as was expected. The 2336.50 bias-up signal had been attacked, but not touched before reacting down to 2333.00. No-bias triggered, but no downside was required, and sellers weren't gaining control. This increased the potential for no-bias trending, targeting at least the 2340.00 overnight high. A probe higher did begin, and extended to touch 2343.00.

No-bias trending requires a retest of the un-triggered bias signal. Plunging into the bias environment exit came within 2 ticks of the morning's 2336.50 bias-up signal. Its attraction below is now neutralized. It was quite a novelty -- and perhaps foretelling -- having "unfinished business below" for a change.

Overbought RSIs at the 2343.00 high still require a retest, which is being threatened now. The 2342.25 bias-up signal held two tests to avoid triggering. So, probing any higher could also be no-bias trending, and it would also be doomed to failure. Back under 2338.00 at any time would point back down.  

Expiration has likely exacerbated the rally's productivity. Yellen's testimony and Trump's fiscality were only catalysts. The rally's breakout was broad-based and organic, but now five days later it is more influenced by the mechanics of expiration.

Wednesday duplicated Tuesday's opening weakness and intraday recovery to new highs in the afternoon. More so, the afternoon bias environment's highs were probed during the final hour. The three prior sessions gapped up and extended higher only to an afternoon bias environment high. And Wednesday produced the rare double occurrence of no-bias trending.

So, optimism is improving through the day instead of waning, which is potentially bearish from a contrarian perspective. Also, the rally's sponsorship is increasingly event-based, much more temperamental than organic accumulation. And weak-handed sponsorship is impatiently pushing the afternoon's higher.

Gapping up again Thursday would once again be vulnerable to a morning of backing-and-filling, as would gapping down -- the afternoon's rally above its 2342.25 bias-up signal was no-bias trending that requires being retraced, potentially down to its 2341.00 1:20 print. Extending higher relentlessly anyway would next target 2366.00 -- and if met Friday morning, the bullish WedEX could invert down. Meanwhile, the WedEX signal triggered actively bullish, easily. Price action is likely to be biased up into and out of the weekend, Friday afternoon and Monday morning. Thursday's open won't be able to affect the setup in this particular instance. Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

THU morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2351.00 2349.00 ...would target  2356.25  2354.50 Bias-down: under  2343.75 2342.00 ...would target  2337.50  2335.50 Signal status: NO-BIAS, 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.