Stock Market Trading Signals - 04-06-2016

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... Trending down relentlessly Monday night and gapping down Tuesday held a test of Friday's morning's 2039.00 opening print. Its support produced a bounce to 2048.00 that was reversed to fresh session lows coming out of the noon hour. The bias environment's bounce to 2046.00 was also reversed to fresh session lows at 2034.25 into the close. The session's last sell signal that triggered under 2042.50 was neutralized by its last bounce limit that was violated above 2035.75. Overnight action's new info... Spiking up into the futures close was extended overnight to 2049.50. That has been retraced down to 2040.50, which an interim bounce to 2047.00 has reversed down to test what had been yesterday's last sell signal under 2042.50. If, then... Tuesday avoided extending the overnight slide. But the burden of proof is on buyers at this stage of the pattern. Not yet recovering or forming an accumulative pattern only keeps the door open to extending the decline. Having ended Tuesday's cash session at fresh relative lows, only gapping up Wednesday above Tuesday afternoon's 2046.00 high can invalidate the decline's momentum. Probing above it overnight and still not recovering it through the open would only add to the downside selling pressure. Regardless, now having testing 2044.50, a break back under 2041.00 (tested once already) would likely resume the decline. First Trade... Exiting the open at 9:45 under 2041.00 would be unlikely to trigger the 2044.50 bias-up signal at 10:15. Exiting the open above 2046.00 would be likely to trigger bias-up.

Sellers gain traction, then give buyers more rope. A lot of it. The open's test of 2041.00 resistance was reversed down to fresh lows at 2035.00. Trending down through the opening 15 minutes of volatility indicated that bearish scenarios remained intact and that sellers would not be marginalized.

Sellers aren't marginalized? Really? The 2035.75 bias-down signal didn't trigger, and an offsetting test of the 2044.50 bias-up signal was put into play. It was fulfilled soon after a knee-jerk reaction to the 10:30 EIA report retested 2035.75 as support.

Sellers aren't marginalized? Really? Probing above the 2044.50 in a no-bias environment -- now attacking the 2049.50 overnight high -- is "no-bias trending." That requires being retraced entirely before a durable rally could be launched.

Sellers aren't marginalized. Really. Only exiting this morning's bias environment above its 2051.00 bias-up target would invalidate the "no-bias trending" and its attraction back down to 2044.50. Otherwise, "no-bias trending" is usually the work of weak hands. Regardless of the bounce's degree or slope, patient sellers allow it so their satisfied opposition is less influential later. If this morning's sellers did gain traction, then this afternoon's reaction to FOMC Minutes should resume the decline, or accelerate it if resumed already. Extending higher anyway would leave unfinished business below at 2044.50, and potentially lower.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2061.00 2053.50 ...would target  2064.00  2058.75 Bias-down: under  2051.75  2044.50 ...would target 2046.75  2039.25 Signal status: noN-BIAS, TESTED BIAS-UP 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.

Wednesday's open held a test of the morning's  2035.75 bias-down signal, putting into play an offsetting test of the morning's 2044.50 bias-up signal. Probing above it during the no-bias environment is called "no-bias trending," which is doomed to failure. Eventually. Historically. That didn't prevent extending higher Wednesday, up to 2060.50. That's not a little. No-bias trending isn't extremely rare. Not retracing no-bias trending the same day is rarer, and anything rare is uncomfortable. So, extending sharply higher is frustrating. And it's certainly not what the opening action had suggested by trending down productively -- before holding a test of the bias-down signal at 10:15.

Context on top of context is telling us the one-day rally is temporary. It neutralized the attraction above back to Monday's close. The two-day decline preceding it was contained entirely within Friday's range. And Wednesday's rally is contained entirely within the two-day decline preceding it.

None of which prevents a fresh high. A retest of Sunday night's "new Globex trend extreme." A new trend high close that satisfies Friday's new trend high close requiring at least one more. But that context on top of context is telling us that neutralizing the attractions above, before completing a correction below, could resolve in a downtrend much more destructive than just a correction.

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

Monitor overnight Globex trading in the chaRTroom here.

THU morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  2068.25  2061.00 ...would target  2073.50 2066.25 Bias-down: under  2058.00  2051.75 ...would target 2051.75  2044.50 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.