Stock Market Trade Signals - 12-07-2015

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... Friday's bullish reaction to the pre-open Employment Situation report had triggered a 7-point surge to attack 2063.00. Its reaction into negative territory at 2046.50 was recovered to greet the open gapping up, extending higher 25 points through the morning to 2069.50. The legs were large, but the structure wasn't much different than many Fridays, consolidating into the noon hour. Then a Draghi-headline triggered another surge that extended to 2093.00, settling around 2088.00. Overnight action's new info... Flat-to-lower ranging was transformed at Europe's opens, surging to probe fresh highs at 2095.50. The one surge was retested, but not extended. Ranging there around Friday's late 2093.00 high is still underway. If, then... The timing of Friday's noon hour rally leg suggests that it was sponsored by weak hands. Extending higher depends upon gapping up by attracting new sponsorship. That's not yet indicated, not by only probing Friday's high and ranging around it. So, that leaves Friday afternoon's rally vulnerable to a correction this morning -- if not also to being fully retraced. First Trade... Exiting the open at 9:45 above 2095.25 would be likely also to trigger the 2092.50 bias-up signal at 10:15. Exiting the open under 2083.50 would be unlikely to trigger bias-up. Exiting the open under 2078.25 would be likely to trigger the 2080.50 bias-down signal at 10:15.

Correcting Friday's weak-handed upleg. The origin of Friday afternoon's rally leg had indicated that its sponsorship was weak-handed. That doesn't prevent probing higher, but it does require its correction.

The minimum objective for a correction has been met, in the minimalist of ways. Potential to 2075.00 was attacked to within 1 tick.

The 2074.50 bias-down target has been met to within 3 ticks. It's still an attraction, but won't be considered "unfinished business" if never touched.

Meanwhile, the correction can extend down, whether to 2072.00, or to 2065.00 and potential also 2060.00. Exiting the bias environment back above its 2080.50 bias-down signal would suggest the correction had ended. Late update: 2074.50 was just met. RSIs are diverging positively, but the corrective trend otherwise remains down.

MON afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2080.00  2078.25 ...would target  2086.00  2084.50 Bias-down: under  2069.25 2067.75 ...would target  2062.25  2060.50 Signal status: NO-BIAS, TESTED BIAS-DOWN 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.

Correction objective met, leading to consolidation. This morning's 2074.50 bias-down target was tested before bias-down was signaled. It was soon met, with plenty of time remaining in the bias-down environment. More substantial corrective target attracted price down. The 2065.00 target was pierced by 2 ticks at the 11:30 bias environment exit. Its test reacted up 10 points to 2074.50 before noon. It's likely that the correction is fulfilled. But that doesn't necessarily equate to reversing back up immediately. At least one timing window can be spent "backing-and-filling" or forming a more comprehensive pattern. Of course, a negative news headline could exacerbate the pullback, but not necessarily. Backing-and-filling is simply vulnerable to becoming another downleg. Back above 2070.50 would launch a recovery. Meanwhile, this afternoon's 2067.75 bias-down signal is now being tested down to 2066.00.

TUE morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2081.75 2080.50 ...would target 2088.50  2087.50 Bias-down: under 2074.25  2073.25 ...would target 2068.00  2066.75 Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED 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.

We knew the morning's decline had likely ended upon meeting the pullback's 2065.00 corrective target. We also knew the rally wasn't likely to resume immediately, and not to expect buy signals to be very productive. The rally wasn't required to resume at all Monday, so it shouldn't be surprising that only a last-hour buy signal finally extended beyond its first 3 minutes or 3 points. In fact, that last leg did rally through its 2069.00 buy signal back to the 2074.50 prior highs. And then higher, to its 2077.50 target and higher. Unlike similarly time late breakouts from last week, Monday's doesn't require correcting because it is counter-trend. The session earlier was a correction. So, presumably the rally has resumed -- or still want to resume. Details and other markets coverage are discussed in the post-market Wrap recording here: https://roddavid10.mitel-nhwc.com/join/zvvbzfc

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