Realtime Day Trading Trends and Signals - 02-27-2015

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...
The topping indicated Tue-Wed while probing new highs was followed by Thursday''s entire session being spent in negative territory. The post-open dip to 2103.75 was retraced entirely back up to the 2111.75 opening high, and the afternoon''s lower low at 2101.50 was recovered to 2110.25, but neither recovered positive territory. The setup is called "ineffectual pessimism," since selling didn''t actually reverse the trend down. Still, sellers were productive when it mattered to gain traction -- exiting the bias environment under the noon hour''s low and entering the final hour even lower. They also left oversold RSIs outstanding at Thursday''s 2101.50 low.

Overnight action''s new info...
Thursday''s late bounce was soon retraced down to 2106.00. Price action since then has ranged around it between 2105.25-2108.75

If, then...
Will yesterday afternoon''s sellers be rewarded for having gained traction? That would give them control of this morning''s bias-environment, whether just probing under the open all morning, or actually trying to trend under yesterday''s low. It''s not yet too late for a rally effort that gaps up above yesterday''s highs to invalidate yesterday afternoon''s sellers, but it will be too late soon. After opening flat-to-lower, this morning''s only remaining path higher would be to duplicate Tuesday''s late rally -- its effort would be doomed to failure, as Tuesday''s effort finally failed Wednesday. But patient sellers squeezing out the last bit of weak-handed buying wouldn''t be inappropriate for the topping process.

First Trade...
Exiting the open at 9:45 under 2101.50 would be likely also to trigger the 2102.25 bias-down signal at 10:15. Exiting the open above 2115.25 would be likely to trigger the 2112.75 bias-up signal.

The most reliable path higher this morning would have gapped up above yesterday''s highs to trigger bias-up. That, or else exit the first hour above the bias-up signal anyway, invalidating the no-bias signal.

Neither path was followed.

Chicago PMI triggered a plunge that came within 1 point of the bias-down signal. But without actually touching the bias-down signal before triggering no-bias, an offsetting test of the bias-up signal isn''t in-play.

At least we''ve established the traction gained by yesterday afternoon''s won''t be rewarded this morning. That''s very important to continue forming the topping pattern. A retest of prior highs today remains possible, albeit not required. And a retest of prior highs during the afternoon''s bias environment remains likely to reverse down, albeit not require.

FRI afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2114.50
2112.25
...would target 2120.25
2118.25
Bias-down: under 2107.75
2105.75
...would target 2102.00
2099.75
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))
Friday''s gap up couldn''t avoid dipping under Thursday''s low. But the dip was recovered back into positive territory. That is the basis of a bullish "Pivot Reversal" which would reverse the trend up sharply and quickly, if the close were above the morning''s high. It was essentially unchanged.

Gold Apr Contract (GC, ETF: (GLD))
Bouncing back up to Thursday''s upper-end at 1219.00 without first continuing its retracement wasn''t likely to resume the rally attempt, which was already premature. Rallying immediately Monday is unlikely, but it is probably the only way to avoid dipping to 1204.00. and 1197.50, if not also to 1185.00.

Silver May Contract (SI, ETF: (SLV))
Gapping down slightly Friday didn''t extend. But neither did the quick reversal into positive territory, as the balance of the session fluctuated around the 16.55 prior highs.

30-year Treasury Jun Contract (US, ETF: (TLT))
As a corrective bounce target, March''s 146-14/147-00 equates to June''s 162-20/163-04. As a pullback limit, 146-14 equates to 160-02. Regardless, both pullback limits were tested Friday. Whether or not probing any lower first on Monday, the rally can now resume before the close.

Crude Oil Apr Contract (CL, ETF: (USO, UWTI))
Thursday''s breakout under the 49.00-50.50 consolidation. In fact, it gapped up slightly and eventually probed a little higher intraday. That prevented confirming Thursday''s break, while being too shallow to reverse the trend up..

Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
The negative knee-jerk reaction to Thursday''s EIA report spent Friday consolidating. Delaying a recovery suggests the reaction wasn''t so knee-jerk. But that doesn''t make the pattern bearish, and back above 2.77 would trigger a buy signal targeting fresh highs.

If we''re certain of Monday gapping down... then a hold-short through the weekend makes sense, right? Not necessarily. The potential reward has to outweigh the risk, and not just match it. Monday''s potential to gap down aside, the degree wasn''t much greater than the gap up target.

Pattern points... (Setups and technicals)
Despite spending two consecutive days in negative territory, and despite selling gaining traction for two consecutive afternoon, the topping pattern hasn''t yet triggered.

A downleg would be more credible if begun AFTER first retesting the overbought RSIs at Wednesday''s 2117.75 high. At least, a downleg could be more substantial, and not limited to either 2095.50 or 2088.00.

Starting the new week by rallying back to Wednesday''s high is likely to begin by gapping up. Probing lower first would be vulnerable to melting down, but unlikely.

What''s Next... (Outlook and opportunities)
We''ll review the broader market setups and any stock chart analysis requests at this weekend''s Saturday Review. Click here anytime within 30 minutes of its 9:30am ET start.

MON morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2113.00
2111.00
...would target 2118.00
2116.00
Bias-down: under 2103.50
2101.50
...would target 2097.50
2095.50
Signal status: LATE BIAS-UP 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.