Stock Market Trading Signals - 08-28-2015

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...
Wednesday night''s rally into Thursday''s gap up had extended to the first of my corrective bounce limits at 1986.00, up 48 points on the day. That was met by a 42-point plunge to fresh post-open lows at 1944.00. Sellers gained traction for the effort, and then hibernated on their laurels as the balance of the session retraced that plunge. Entirely. A 96-point round trip in the span of two hours.

Overnight action''s new info...
Initially extending yesterday afternoon''s recovery of 1986.00 to fresh highs at 1992.75 proved short-lived. The balance of the night has been retracing the recovery, back down to 1967.50. A 10-point bounce there was retraced entirely, producing a 7-point bounce to 1974.50.

If, then...
Afternoon traction isn''t signaled as often as it has been this week. Also different for the setup is how the market has been rewarding it, by only preventing the opposition from extending, and not by extending the traction. Of course, extending the traction is difficult in the face of such abnormally wide overnight reactions hasn''t been done all week. Is it surprising that a normal resolution may be a creature of normal market environments? Regardless, the consistent feature to this indicator is the context it provides. And if the open doesn''t immediately invalidate the prior afternoon''s traction, then that traction will still determine direction for the next morning and/or afternoon.

So, will yesterday afternoon''s sellers be rewarded by trending under their 1944.00 low today? When the overnight high has been almost 1993.00 and the open is indicated around 1970.00, perhaps we should focus on whether the morning will be attracted next to 1944.00 or to 1993.00, before bothering with what happens after it gets there. As for that potential to trend under yesterday''s lows, I wouldn''t waste my attention on this just yet. But it''s still fun to keep that notion not too far in the backs of our minds to pull out later -- especially if the fast-approaching weekend illiquidity is met by retracing even more of yesterday afternoon''s rally.

First Trade...
Exiting the open at 9:45 above 1980.50 would be unlikely to trigger the 1979.50 bias-down signal at 10:15, which WOULD be likely to trigger if the open were exited under 1970.50 at 10:15. And exiting the open under 1964.50 would be likely also to renew the bias-down signal by not recovering its 1969.50 bias-down target at 10:15. Exiting the open above 1986.00 should at least test the 1990.00 bias-up signal.

No-bias, but not enthusiastically.

Recovering 1980.50 through the opening 15 minutes, or not, would have told us the 1979.50 bias-down signal didn''t intend to trigger at 10:15. Not recovering 1980.50 would have made bias-down likelier to trigger.

2980.50 was still being overlapped at 9:45, so no preliminary signal. All it foreshadowed was the 1979.50 bias-down signal''s murkiness, being overlapped within 3 minutes of the 10:15 bias timing window. That invoked the grace period through 10:30.

At 10:30, the 1979.50 bias-down signal was recovered and did not trigger. This is a late no-bias environment. An offsetting test of the 1990.00 bias-up signal is in-play.

CAVEAT: Being a "late" no-bias environment, its normal objective is not a requirement. Fulfilling it at all could meanwhile be a struggle. And 1979.50 is still a relevant dividing line, so back under it could trigger another dip.

It''s not exactly the optimal bias environment. It also doesn''t reject the traction gained by yesterday afternoon''s sellers. So, drifting flat-to-lower this morning would remain abnormally vulnerable to extending down sharply this afternoon.

FRI afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 1989.25
1986.25
...would target 1999.25
1996.00
Bias-down: under 1977.00
1973.75
...would target 1970.75
1967.50
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 Sep Contract (EC, ETF: (FXE, UUP))
Friday''s flat open precluded forming an Island Reversal from Thursday''s range. But the combined Thursday-Friday pattern may still form an Island if Monday''s open were to gap up.

Gold Dec Contract (GC, ETF: (GLD))
Brief overnight strength and then again post open began probing above the 1130.40 buy signal up to 1140.00, suggesting a tleast a test of 1147.40 is in-play.

Silver Sep Contract (SI, ETF: (SLV))
Thursday''s bounce to 14.55 resistance hovered optimistically Friday, still needing to fill the gap back down to Wednesday''s 14.31 open before a durable recovery would be credible.

30-year Treasury Sep Contract (US, ETF: (TLT))
Friday''s probe above the 157-07 buy signal was more productive than Thursday''s attempt before falling back to 156-16. The buy signal remains valid nonetheless.

Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Backed into a corner with falling prices, the Saudis have taken matters into their own hands to goose prices. Now we know why Thursday''s rally was so substantial despite my target having been missed by 20 cents at the lo -- Saudis were entering Yemen. The news pushed price even higher, no doubt aided by two days of impending illiquidity and the return of a pre-weekend premium for geopolitical risk. Back under 42.75 would suggest fresh lows in-play at 37.55.

Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Friday''s gap up didn''t leave any unfinished business below since Thursday''s range was essentially an inside day. The pattern remains credible for launching a new upleg so long as new lows are avoided.

MON morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 1993.25
1990.00
...would target 1999.25
1996.00
Bias-down: under 1973.25
1970.00
...would target 1966.50
1963.25
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.