Stock Market Trade Signals - 02-03-2016

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

CHARTROOM LINK (pre-open Market Tour begins at 8:55 ET)

Through the prior close... Gapping down Tuesday under Monday's lows inverted the traction gained by Monday's late buyers. The lowest objective was met under 1890.00, triggering a sharp reversal up to attack the 1900.00 resistance. Potential was left outstanding to 1886.00. Overnight action's new info... The slide resumed and soon tested the outstanding 1886.00 objective by 2 ticks. And held. Tuesday's 1895.00 cash session close was recovered by midnight.  Rallying through Europe's opens attacked 1909.00. Now a pullback to 1894.00 is trying to recover. If, then... Another example of the market satisfying all influences, no matter their divergence. I described the two currently relevant influences in yesterday's post-market Wrap. First, yesterday's last bounce had stopped pessimistically short of testing its last relative high, which is potentially bullish from a contrarian perspective. Second, that bounce had originated from only piercing the decline's target range -- the slide had stopped optimistically short of probing the entire objective, which is potentially bearish. Overnight action satisfied both. So, is momentum reversing up, or has the overnight recovery only traded one prior high's resistance for another (1911.00 from yesterday morning's bias environment). I would tend to be bullish here since testing the decline's objective was responsive both yesterday and overnight. So long as the open doesn't hold a relevant prior's test, the window is open for a rally. Otherwise, retesting overnight lows could find no support remains. First Trade... Exiting the open at 9:45 under 1901.50 would be unlikely to trigger the 1904.50 bias-up signal at 10:15. Exiting the open above 1906.25 would be likely to trigger bias-up.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 1911.50 1904.50 ...would target 1917.75  1910.75 Bias-down: under  1897.75  1890.75 ...would target  1892.50  1885.50 Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED, TESTED BOTH BIAS-UP PARAMETERS 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.

From both bias-ups through both bias-downs. The pre-open high touched this morning's 1910.75 bias-up target just 10 minutes before the open. Its reaction down quickly fell under the 1904.50 bias-up signal. Rejecting tests of both bias-up parameters through 10:15 would put into play offsetting tests of both bias-down parameters. But, wait, there's more. The 1890.75 bias-down signal and 1885.50 bias-down target were tested, too. And exceeded through 10:15 to renew the bias-down signal. That has been exceeded by another 20 points down to 1865.00.

Substantial selling pressure is required to reject tests of both bias-up parameters and to trigger both bias-down parameters. This is very unusual activity, so be prepared for almost anything.

Persistently oversold 3-minute RSI has ended with a bounce above 1874.25. That put into play a test of this morning's 1885.50 bias-down, which is now met to within 3 ticks. Simultaneously oversold 1-minute and 3-minute RSIs at the low require its eventual retest. Back under 1876.00 and 1872.25 would signal that leg underway, targeting 1862.75.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  1902.00 1895.00 ...would target  1908.50  1901.50 Bias-down: under  1884.00 1877.00 ...would target 1878.00  1871.00 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.

Oversold RSIs at Wednesday's 1865.00 low require an eventual retest. Competing against that is the afternoon's rally having gained traction. Unless inverted or otherwise invalidated, Thursday morning is likely to probe fresh highs before being vulnerable to resuming the decline. Details and other markets coverage are discussed in the post-market Wrap recording here.

When intraday access lapses, monitor overnight Globex trading in the chaRTroom here.

THU morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  1915.00 1908.00 ...would target  1920.00  1913.00 Bias-down: under  1905.50  1898.50 ...would target 1898.50  1891.50 Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED, BIAS-DOWN SIGNAL TESTED 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.