Realtime Day Trading Trends and Signals - 10-23-2015

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

CHARTROOM LINK(s) o Win XP-Friendly entry o non-xp friendly (ilinc) (pre-open Market Tour begins at 8:55 ET)

Through the prior close... Thursday's gap up above the prior afternoon's high immediately rejected that prior session's downtrending close. And that's the recipe for a "session-long rally," which proceeded to rally sharply. Finally closing beyond the range around 2019.50 put into play the next higher objective at 2055.00. Buyers didn't gain traction for their efforts, and oversold RSIs at the afternoon's 2034.50 low require a retest.. Overnight action's new info... Extending higher into and out of the close quickly fulfilled the next higher 2055.00 objective. Spiking up at the Globex open quickly came within 1 tick of 2062.00. Then price began shifting lower, all the way through Europe's opens, albeit at a shallow slope that bottomed above yesterday's highs at 2053.25. Then the initial overnight high was probed by 1 point up to 2063.25... Oh, and then China cut its interest rates and its reserve requirements ratio, triggering a spike up to 2074.25. If, then... Session-long setups tend to extend into the following morning. Done. And since Thursday afternoon's buyers didn't gain traction, gapping up is the only way to maintain the uptrend. Done... or overdone? Friday's are different animals due to the impending weekend illiquidity. That make us into different animals as it shifts our focus, or dilutes it. So does 57 points in 24 hours, after already having rallied considerably. Closing above 2055.00 would put into play 2088.00, and gapping up would leave unfinished business above if post-open action were to reverse down -- none of which prevents trending back down this morning back to yesterday's highs. Today more than usual, the opening 15 minutes will be very revealing. First Trade... Exiting the open at 9:45 above 2057.50 would be likely also to exceed the 2056.00 bias-up target at 10:15 to renew the bias-up signal. That doesn't seem very relevant at the moment 😉

Hovering choppily above the gap up. I had suspected the pre-open rally was not durable. I had wondered whether its high could be retested before trending back down. I don't think the 2065.00-2066.00 pullback limit was rejected and recovered, but tests of the 2063.50 sell signal only overlapped it before reacting up. The range is centered around 2063.50 / 2065.00-2066.00. The morning seems committed to maintaining its attraction, if not also remaining within it -- instead of trending back above it or below it. 2063.50 support has been chipped away, but not breaking lower by 10:30 makes it unlikely to break lower before 11:30.  So, trying anyway to break it between 10:30-11:30 should be punished by an offsetting fresh post-open high. Should be. Normally would be. This is a Friday, so be aware that Friday timing windows can be fungible. And 2063.50 is being probed again...

FRI afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2072.75 2066.00 ...would target  2078.75  2072.00 Bias-down: under  2061.75 2055.00 ...would target  2054.75 2048.00 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.

Ill-timed dips trap shorts. Post-open bounces tried to resume the pre-open rally, but lower and lower highs kept returning to 2063.50 support. Its tests were mostly overlapped, or only briefly probed. But after holding two tests before 10:15, it had become too late for a reliable break lower. Being unreliable didn't preclude there being a break lower. It just made a break lower likely to recover. And being likely to recover didn't limit how deep that hypothetical break could first probe. 7 points, actually. The hypothetical late, temporary break probed 7 points under 2063.50 to attack 2056.50. It would have been credible for extending down -- being a Friday, and being unusual action. Delaying the break would have been likelier to gain traction, but the premature break was likely to fail. The consequence for an inappropriately timed break -- which fails -- is to retest the original leg's origin. That would be a fresh session high around 2072.00. The afternoon's no-bias environment is now ranging around its 2066.00 bias-up signal. Exiting the bias environment back under 2065.00 would be vulnerable to sliding anyway.

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 Sep Contract (EC, ETF: (FXE, UUP)) Extending down even more sharply on China's interest rate moves has now produced a second consecutive lower close confirming Thursday's breakout. Bounce potential is still 1.1180, if not 1.1140. But at least an eventual third lower close is now required. Gold Dec Contract (GC, ETF: (GLD)) Surging in reaction to China's moves sent price through 1173.50. But 1180.00 was only attacked and not recovered before optimism disappeared. The 1165.50 pullback limit was tested down to 1160.00. Immediately recovering 1165.50 would be likely to extend higher. The pullback is otherwise likely to test 1155.00. Silver Dec Contract (SI, ETF: (SLV)) Gapping up Friday and extending to 16.10 was reversed back into negative territory at 15.70. That was early and the balance of the session ranged narrowly around 15.85 to keep alive potential for launching a new upleg. 30-year Treasury Dec Contract (US, ETF: (TLT)) Friday's gap down to fresh lows testing 156-16 compensated for the delay of Thursday's redundant test of the bonce limit. But a second consecutive lower close confirming the trend change is still required. Crude Oil Dec Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short)) Not terribly dissimilar to Thursday, Friday initially firmed in reaction to China's economic nudging, but still reversed down to extend the trend reversal. Natural Gas Nov Contract (NG, ETF: (UNG, UNL)) Gapping down Friday precluded there being an immediate durable recovery. The open's gap must still be filled after bouncing back up to "higher prior lows," assuming the drop even tries to end. Which trending down after the open didn't suggest.

MON morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2078.75 2072.00 ...would target  2085.50  2078.75 Bias-down: under  2070.25  2063.50 ...would target 2065.25  2058.50 Signal status: 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.

Closing above 2055.00 has now put into play 2088.00. Friday afternoon's buyers gained traction by exiting the bias environment above the noon hour's high, and by entering the final hour higher. And Thursday's breakout above the multi-session trading range has now been confirmed by a second consecutive higher close - at least an eventual third higher close is required. None of which prevents an immediate pullback. They almost invite a pullback, to refuel the rally whose upside resolution is entrenched. Of course, gapping down enough could reject Friday's gains altogether... Details and other markets coverage are discussed in the post-market Wrap recording here: https://roddavid10.mitel-nhwc.com/join/kfywmcp

REMINDER: Saturday Review starts at 9:30am ET. I'll send links in the morning.