Stock Market Trading Signals - 02-11-2015

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

Enter the Chartroom here (pre-open Market Tour begins at 8:55 ET)

Through the prior close...
Tuesday''s gap up was corrected during the morning''s bias environment, but there was nothing corrective after that. The rally resumed into the noon hour, and out of the bias environment, stopping short of touching Friday''s intraday high. The position-squaring window dipped, but the session still ended higher than Friday''s close. And the rally gained traction for its effort, exiting the bias environment above the noon hour''s high and entering the final hour even higher.

Overnight action''s new info...
After rallying 22 points from Tuesday morning''s low, a 5-6 point slide has kept overnight action trending down throughout.

If, then...
The overnight slide is attacking yesterday''s ~2057.00 bias environment exit. It can be probed without reversing the trend down, so long as the probe isn''t maintained through a relevant timing window. Limiting the pullback would likely probe fresh highs this morning, rewarding yesterday''s rally for having gained traction. This is developing against the backdrop of a Eurozone finance ministers discussing Greece. Like price action, headlines have been downplaying the potential for positive news. But that doesn''t prevent lower lows, even if only as a temporary detour to new highs.

First Trade...
Exiting the open at 9:45 above 2061.75 would be unlikely to trigger the 2059.50 bias-down signal at 10:15. Exiting the open above 2064.50 would be likely at least to test the 2067.25 bias-up signal.

Sellers stalled, but buyers balk.

The overnight dip own to 2058.00 wasn''t likely to extend, and did not. Its recovery into and out of the open attacked 2065.00. 

No-bias triggered, after the open''s blip-down barely touched the 2059.50 bias-down signal. So, an offsetting test of the 2067.25 bias-up signal is in-play.

Back under 2059.50 through 11:30 could invalidate the no-bias requirement for testing the bias-up signal. That''s not likely historically after not invalidating the signal by 10:30. Also, the traction gained yesterday afternoon hasn''t yet been rewarded by fresh highs.

Breaking under 2060.75 (it''s being probed now) would open the door to fresh lows anyway. The path to fresh highs remains vulnerable to temporary dips, potentially down to 2057.50 or even to 2055.50.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2072.25
2067.25
...would target 2078.25
2073.25
Bias-down: under 2062.50
2057.50
...would target 2057.25
2052.25
Signal status: BIAS-DOWN 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.

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 Mar Contract (EC, ETF: (FXE))
Tuesday''s "ineffectual pessimism" wasn''t rejected immediately Wednesday. That wasn''t required, but it would have been optimal to establishing a low had formed. The delay could be dismissed considering the Eurogroup meeting, so long as the retest of Tuesday''s low holds.

Gold Apr Contract (GC, ETF: (GLD))
Having formed a Descending Triangle off of Monday''s corrective bounce, Wednesday''s break to a fresh low now requires a second consecutive lower close to confirm the next downleg underway, ultimately targeting 1185.00-1195.00. Closing back above 1226.00 would start to signal Wednesday''s breakout is false.

Silver Mar Contract (SI, ETF: (SLV))
Wednesday''s selling originates from a higher level that help to avoid fresh lows. That''s not necessarily bullish, and it does help to confirm that Monday''s bounce was only a temporary correction.

30-year Treasury Mar Contract (US, ETF: (TLT))
Another fresh break Tuesday was not confirmed by a second consecutive lower close Wednesday. In fact, a fresh low was reversed back up into positive territory. This sequence can repeat indefinitely, but tends to end with a steep rally -- but beware of Thursday''s 30-year auction results.

Crude Oil Mar Contract (CL, ETF: (USO, UWTI))
Tuesday night''s dip continued the reaction to the last upleg having failed to hold 52.85 and 51.75. The 49.35 pullback limit was tested intraday down to 48.00 before bouncing back to 50.00. Closing back above 49.35 suggests the pullback has ended, and it was being overlapped through the afternoon.

Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Tuesday''s test of the 2.70 buy signal was still being overlapped at the close instead of breaking decisively. Wednesday''s gap up to test 2.85 suggests the break is valid. I''m giving the pattern a benefit of the doubt that Thursday''s EIA report is being greeted from a position of strength, at least to recover from an initially negative knee-jerk reaction down.

If the WedEX setup is applicable to 3-day weekends... then Wednesday''s close isn''t bullish. That''s because the intraday probe above prior highs was rejected, which normally would be passively bearish. But the probe''s brevity lacked substance, so rejecting it isn''t very relevant either.

Pattern points... (Setups and technicals)
Whether or not it was the result of the pins and needles we discussed before Wednesday''s open, Tuesday afternoon''s buyers weren''t very well rewarded for having gained traction. The overnight slide to 2057.75 was retraced back into positive territory, but not above Tuesday''s 2066.00 highs, and not with complex trending. 

"Unfinished business above" at 2067.25 was created and left outstanding to attract price back up. Then its attraction was neutralized when tested during Wednesday afternoon''s rally up to 2069.75. 

That afternoon rally did probe above Tuesday''s highs. But it was only a single probe, and not complex, which still wouldn''t qualify as rewarding Tuesday afternoon''s buyers.

Meanwhile, the noon hour''s drop to 2053.25 left outstanding oversold RSIs that require the low''s retest. The afternoon''s 2052.25 bias-down target was left outstanding, too.

What''s Next... (Outlook and opportunities)
There is no unfinished business above, only below. A hold-short setup triggered, which barely avoided being invalidated, by delaying the last-minute recovery above 2063.50 until after getting to within 3 minutes of the cash session close. Trending down overnight is likely so long as 2067.00 holds as resistance -- preferably with Globex opening down sharply through the late 2061.00 low.

THU morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2072.75
2067.75
...would target 2079.00
2074.00
Bias-down: under 2060.00
2055.00
...would target 2054.75
2049.75
Signal status: BIAS-UP, EXCEEDED BIAS-UP 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.