Stock Market Trading Signals - 03-02-2015

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...
Friday was the second consecutive session to be spent eintirely in negative territory, probing as low as 2100.75. It was also the second consecutive afternoon for sellers to gain traction. Like its immediate predecessor, its selling pressure failed to close under prior lows. Hold-short through the close barely failed to trigger.

Overnight action''s new info...
Saturday''s surprise rate cut by China wasn''t nearly as influential as its last rate cut in November. That''s assuming it was influential, at all. Sunday night''s 2104.00 open was only 2 points above Friday''s 2102.00 cash session close. Its surge to 2107.75 was quickly retraced to hover at 2104.25, Another surge into Europe''s opens reacted back down sharply from 2109.25. And now fresh overnight lows are attacking Friday''s 2102.00 cash session close.

If, then...
Not closing under a prior low gives the rally a significant advantage. Overnight ranging has created a little extra room for selling pressure to be expended before it can gain traction. That doesn''t prevent the open from trying. The burden of proof is still on sellers, but triggering bias-down would be sufficient. Meanwhile, the past week''s topping pattern is still vulnerable to retesting its upper-end if sellers haven''t yet retaken control.

First Trade...
Exiting the open at 9:45 under 2099.75 would be likely also to trigger the 2101.50 bias-down signal at 10:15. Exiting the open above 2104.25 would be unlikely to trigger bias-down.

Buyers still good to the last drop.

The pre-open drop ultimately extended to pierce Friday''s 2100.75 low by 1 tick. The 2101.50 bias-down signal was already being recovered into the opening, which quickly extended to touch the 2104.25 preliminary level.

2104.25''s reaction down was deep enough to identify a shallower buy signal, which extended to 2111.75.

The 2111.00 bias-up signal was overlapped within 3 minutes of the 10:15 bias timing window to invoke the 15-minute grace period through 10:30. A blip-up at 10:30 triggered "late bias-up."

Had 2111.00 still been overlapped at 10:30, this morning would be "noN-bias" without any bias requirement. A reaction down under 2111.00 at 10:31 was 1 minute too late. This is still a late bias-up. Not being triggered timely, its target won''t become "unfinished business above" if left outstanding this morning.

Presumably, the topping scenario remains on-track for revising last week''s high, and higher, before launching a new downleg. Regardless, no sell signal is calculable without a new distributive pattern forming.

MON afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2115.50
2113.50
...would target 2122.00
2120.25
Bias-down: under 2106.00
2104.25
...would target 2101.75
2099.75
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.

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))
Monday''s gap up got no further than did Friday''s gap up, before reversing to spend the session ranging around unchanged, as did Friday''s gap up.

Gold Apr Contract (GC, ETF: (GLD))
Sunday night''s 1223.00 high probed Thu-Fri highs to threaten a breakout from an ascending triangle pattern, but the session resolved down back to Thu-Fri 1206.00 lows. Post-close action probed lower to test 1204.50, likely on the way to 1195.00 or lower.

Silver May Contract (SI, ETF: (SLV))
Monday''s narrow range started breaking lower post-close, but not with sufficient force to be assured another downleg has begun.

30-year Treasury Jun Contract (US, ETF: (TLT))
The ~161-00 pullback limit finally broke lower, extending down to test the low''s 159-24 pullback limit. It was probed a little more deeply after the close. Closing above 160-24 would help to avoid extending back down to retest prior lows.

Crude Oil Apr Contract (CL, ETF: (USO, USL) 3x UWTI-long, DWTI-short))
Thursday''s breakout under 49.00 wasn''t confirmed Friday, and now Monday has extended the reaction up to test 51.00. But unless that were continued into a surge above 51.25, another break under 49.00 remains likely to launch a more obvious downleg targeting new lows (albeit temporary new lows).

Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Rather than attack the 2.77 buy signal, Monday dipped back down to last week''s lows. It didn''t close lower, so the buy signal remains credible if triggered.

If a top is forming... then its next high should be done optimistically. Overly-optimistically. And its reaction should be sudden, steep and substantial..

Pattern points... (Setups and technicals)
Ready to roll? How about, rollover? Monday morning''s rally proved that Thu-Fri sellers had expended all available selling pressure. Monday afternoon''s rally through Thu-Fri highs proved their origin would be retested, back at last Wednesday''s high.

One question is by how much, although that''s likely to be 2121.25 or 2125.00. Higher is plausible, but not as likely. Another question is what happens then.

The topping pattern assumes the high will be retested overly-optimistically. That means gapping up Tuesday, and then extending relentlessly through last week''s 2117.75 high before correcting. Each higher and higher high would define the reversal trigger.

Regardless of how last week''s high is retested, the rally can still gain traction and extend. A new high close could be confirmed to launch a new upleg.

What''s Next... (Outlook and opportunities)
Hold-long was considered at the close, which was testing the 2110.25 buy signal''s 2115.50 minimum objective. Extending higher shouldn''t probe under 2112.00,. and preferably not even touch it.

TUE morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2118.75
2116.75
...would target 2123.75
2122.00
Bias-down: under 2111.00
2109.25
...would target 2106.25
2104.25
Signal status: BIAS-DOWN, BIAS-DOWN TARGET MET 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.