Stock Market Trade Signals from Viditrade - 05-24-2016

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... Monday’s “inside day” had a lot of swings like its overnight action. But its range was narrower, not testing either bias signal intraday. And it barely avoided ending unchanged except for a late break down to 2044.00. Still, two dry cleaners windows — both the morning and afternoon bias environments -- make that late break dubious, despite it extending to a fresh session extreme before coming to within 3 minutes of the cash session close. Overnight action's new info... Another wide-ranging overnight session... second time's a charm? Monday's late break immediately began bouncing, until a couple of tests of 2047.50 launched a new downleg. It stopped 2 points short of its potential to 2039.50 of the false break that I described yesterday. But price action has otherwise tracked the pattern perfectly, launching a rally at Europe's opens which has extended up to 2053.00. If, then... The next element of the recovery setup we discussed yesterday is to gap up above Monday’s 2054.00-2056.00 highs. Quickly probing them would be credible, too. Just beware the risk of yesterday's two dry cleaners windows being followed by a third. Avoiding that paralysis could produce a session-long rally today. Last night's reversal may be different from Sunday night in one important way, by not greeting the open unchanged, at a starting stop. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 above 2054.00 would be likely to trigger the 2053.25 bias-up signal at 10:15. Exiting the open under 2050.50would be less likely to trigger bias-up.

Is the setup over-promising? Having trended down into yesterday's close, gapping up above yesterday afternoon's highs formed a "session-long rally" setup. Follow-through was productive. Very productive. I noted in the pre-market Tour that this leg's minimum objective was 2068.00, with room for noise above it to 2072.00. That room was touched momentarily. Meanwhile, 3-minute RSI was persistently overbought. That offered the confidence not to sell, let alone not to short. It is still overbought. Pullbacks have room down to 2066.50 without threatening the uptrend. The session-long rally makes that unlikely. Each timing window with one exception should probe above its prior timing window. That exception tends to be the noon hour. The next potential target is 2080.50.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2075.75 2073.00 ...would target  2080.25  2078.50 Bias-down: under  2069.25  2066.50 ...would target 2064.00 2061.00 Signal status: noN-BIAS, BIAS-UP SIGNAL TESTED 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.

Tuesday's "session-long rally" setup succeeded at producing each of its required elements, i.e. all but one timing window probing its prior timing window's high. The exception was the afternoon bias environment instead of the more common noon hour. And price didn't trend up into the close as it often can. A valid session-long rally is often followed by trending up through the next morning's bias environment. It's not required, and fulfilling it can follow an overnight dip. But if sellers haven't retaken control at Wednesday's open, then the morning will likely probe fresh highs. Tuesday's rally didn't gain traction for its efforts, which requires Wednesday's open to gap up if the rally is durable. So, probing fresh highs Wednesday morning without gapping up would be likely to trend back down in the afternoon. All of the above is discussed in the Wrap. One other point we'll discuss in the morning is that Tuesday was a breakout session. While a second consecutive higher close would confirm, be aware that the past three weeks have begun with either a Monday or Tuesday surge that immediately failed. C'est la vie! Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2083.50 2080.50 ...would target  2088.50  2085.75 Bias-down: under  2073.75 2071.00 ...would target 2068.50  2065.50 Signal status: BIAS-UP, BIAS-UP 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.