Stock Market Trading Signals - 10-06-2015

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... Monday's session rode the wave of the combination of follow-through from Friday's inverted session-long setup and from that afternoon's buyers gaining traction. That, and having closed Friday at the 1942.00 objective without rejecting it, then already testing the next higher 1960.00 objective overnight without rejecting it. But only hovering up to 1980.00 beyond the afternoon bias environment's exit prevented buyers from gaining new traction. Overnight action's new info... Gapping down to 1971.00-1973.00 initially bounced to 1975.25, but then trended down through Europe's opens to 1963.50. A bounce to 1973.00 has been retraced 61.8{faed0d6dca04cec8b6b7985efddb9b0651107a3aebb05f69f0166038b8c951f6} back down to 1967.25. If, then... The rally had become extended without gaining traction, making a pullback likely if today's open doesn't gap up above yesterday's highs. That's not impossible from a 10-15 point discount two hours before the open. And it's not very very difficult in this wide-ranging environment. But gapping up is unlikely after having traded at a deficit throughout the entire night. Nevertheless, opening above the overnight highs could still probe above yesterday's highs temporarily.. First Trade... Exiting the open at 9:45 above 1976.00 would be unlikely to trigger the 1972.00 bias-down signal at 10:15. Exiting the open under 1970.25 would be likely to trigger bias-down.  Exiting the open under 1965.00 would be a little likelier also to exceed the 1964.00 bias-down target through 10:15 to renew the bias-down signal, next targeting 1956.00.

Overnight range only now being retested. The pre-open probe to fresh highs above 1973.00 extended higher to test this morning's 1981.00 bias-up signal. Without gapping up above it the signal wasn't going to trigger, not since yesterday afternoon's buyers had not gained traction. And bars probing above it still overlapped it, so it was never actually exceeded. Holding a test of the 1981.00 bias-up signal through 10:15 put into play an offsetting test of the 1972.00 bias-down signal. Little time was wasted extending down to attack it, but it wasn't met until too late to invoke the grace period for possibly triggering it. Still testing the bias-down signal at 10:30 had a slightly different outcome. Slightly. Legs probing under it to 1969.50 were still overlapping the 1972.00 bias-down signal. It was deep enough to consider the no-bias signal invalidated, but not enough to ignore the 1-minute RSI diverging positively. That positive divergence at support launched a bounce attacking 1976.00. Back under 1973.50 might launch another dip -- remember, this session should be about backing-and-filling the rally, so the likeliest resolutions are those that bring the defensive teams back on the field.

TUE afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  1984.00  1974.00 ...would target  1989.00  1979.00 Bias-down: under  1974.00 1964.00 ...would target  1966.75  1956.75 Signal status: NO-BIAS, TESTED BIAS-DOWN 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.

This morning has followed the entire day's script. Whatever's left today, it seems that I won't be available to observe and annotate it. Not in its entirety. The offsetting test of this morning's 1972.00 bias-down signal was probed at 10:30 while 1-minute RSI diverged positively, launching bounces to 1976.00 and 1977.00. With the bias environment lapsing, back under 1974.00 was likely to resume the drop to retest the 1964.00 overnight low. And it was attacked to within 2 ticks before firming into the noon hour.

As today was expected to be all about backing-and-filling, we should remember that this action has room down to 1956.00. The overnight low is now being probed down to 1962.50, so backing-and-filling appears to have resumed.

It might seem like trending, being so far removed from yesterday's highs and close, but it's still within the context of a correction. The entire room down to 1956.00 need not be utilized. But it does need to hold, preferably intraday -- and especially 1960.00 through the close to maintain the rally's upward momentum and its potential back to last month's FOMC high.

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)) Gapping up Tuesday and extending higher is retesting the 1.1265 bounce limit, suggesting that a move down is unlikely, and likely at least to probe higher . Gold Dec Contract (GC, ETF: (GLD)) Resuming the rally Tuesday is now another multi-session breakout, needing second consecutive session's confirmation if a new uptrend is underway. Silver Dec Contract (SI, ETF: (SLV)) Extending sharply higher Tuesday to test 16.00 doesn't have any near-term higher objectives, and there's still room for a pullback down 15.55 without reversing the trend down. 30-year Treasury Dec Contract (US, ETF: (TLT)) Initially following-through Tuesday on Monday's break under the 157-24 sell signal was retraced to the signal itself, still needing confirmation that the trend is reversing down. Crude Oil Nov Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short)) Breaking higher from a multi-session range, even if only on news, still could be confirmed by a second consecutive higher close Wednesday. I'm otherwise not bullish. Natural Gas Nov Contract (NG, ETF: (UNG, UNL)) Initial strength Tuesday didn't extend. I still trust early strength as being credible for extending, but would also want to see the resolution of filling the gap back up to 2.52..

But for the morning's momentary probe above Monday's 1980.00 high, Tuesday was an "inside day," contained entirely within Monday's range. It might have seemed more substantial, being under pressure the entire day. But recall that was the expectation for the day before it even began. The rally need not resume without delay. And it won't resume soon if Wednesday's open is already trending down. Otherwise, the recovery is vulnerable again to resuming Wednesday. Check back for the morning's First Trade blog post.

WED morning signal (triggered at 10:15 ET) SPX ES Bias-up: above  1986.00 1976.00 ...would target  1991.00  1981.00 Bias-down: under  1974.00  1964.00 ...would target  1968.50  1958.50 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.