Stock Market Trade Signals - 12-31-2015

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... Tuesday afternoon's buyers had gained traction for their efforts. Gapping down Wednesday back to Tuesday's 2065.00 noon hour lows was on the borderline of negating that traction. Quickly fulfilling the morning's 2061.50 bias-down target held through the day, but never launched a recovery. The last half-hour exploited that delay by plunging 10 points to 2053.50. Its reaction up attacked 2060.00 before trending back down toward the plunge's low. Overnight action's new info... The plunge's consolidation has persisted, narrowing its range between 2054.00-2058.00. The plunge's low hasn't been touched (that's basis ES, while SP had only plunged to 2054.50). The resulting overnight pattern has formed a massive Symmetrical Triangle. If, then... Any influence by overnight patterns on intraday action will be obvious through the opening 15 minutes of volatility, if at all. So, if the overnight Symmetrical Triangle intends to resolve as the pattern often does (i.e. break falsely in one direction before reversing more substantially in the opposite direction), then that reversal must be underway by 9:45. Otherwise, already breaking in one direction would be less likely to reverse direction this morning. So, maintaining a break into and out of the open -- whether higher, or lower -- would be credible for extending in that direction intraday. Reversing a break would be likely to extend if the reversal were maintained through 9:45. And although today's volume is relatively heavy for a pre-holiday weekend, it's not necessarily liquid, and a one-sided market could trend relentlessly into the afternoon if given the right shove. First Trade... Exiting the open at 9:45 above 2058.00 would be unlikely to trigger the 2052.00 bias-down signal at 10:15. Exiting the open above 2062.50 would be likely to trigger the 2061.00 bias-up signal.

Pre-open plunge extending post-open. The overnight Symmetrical Triangle broke sharply in one direction. As sharply as possible to still be within the Symmetrical Triangle's orbit. That kept it vulnerable to being a false breakout that reverses more substantially in the opposite direction, if already reversing up by 9:45. But the clock kept ticking. The 2045.50 pre-open low was a 261.8{faed0d6dca04cec8b6b7985efddb9b0651107a3aebb05f69f0166038b8c951f6} extension of the Triangle. Retesting it had to be done and recovered almost immediately to be dismissed as opening noise. The open's 5-point plunge to 2043.00 did react up immediately back above 2045.50. Extending higher would leave no new low requiring a retest. But the clock kept ticking. Multiple tests of 2043.00 held their 3-minute lows, but the reactions couldn't recover 2045.50. Chipping away at their support could have avoided requiring an eventual break lower, regardless of the path there. But the clock stopped ticking. The 2046.00 bias-down target wasn't recovered by 10:15, renewing the bias-down signal and putting into play 2039.00. It was quickly met by a 6-point plunge to 2037.00.

2039.00 has so far held, its test reacting up to 2041.00. Oversold RSIs at the low require its retest, probably down to 2036.25. Back above 2044.50 would start to suggest the oversold RSIs will be left outstanding by a bigger detour.

THU afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2059.00 2051.00 ...would target  2064.50  2057.50 Bias-down: under  2050.25  2043.25 ...would target 2044.75  2037.75 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.

Well, that was a fun ride, good the last drop. The bounce from 2037.00 to almost 2055.00 was retraced and reversed to almost 2030.00. If that's the product of day-end, week-end, and year-end low volume influences, then Monday's open should gap up very much away from the late low. A post-close bounce back up to 2037.00 made that easier. Not gapping up on Monday, with volume expanding, would likely trend down a lot. An even funner ride! Have a safe and happy New Year's!

Details and other markets coverage are discussed in the post-market Wrap recording here:

ilinc/Mitel*   || Anymeeting MP4

*We're ending ilinc/Mitel, so the recording access may not be available.