Stock Market Trading Signals - 12-07-2016

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... Tuesday's intraday rally came expectedly, but not as expected. Despite being indicated to gap up as high as 1 tick above Monday's high 2208.75 high, the 2206.25 opening print was back under Monday morning's highs. That pre-open slump quickly extended down to attack Monday's lows to within 2 points at 2100.00. But then the balance of the session did rally, not surging, relentlessly through multiple timing windows, to new highs at 2212.00. Last week's pullback was confirmed to be only temporary, and the 2110.25 anchor from last Wednesday's open -- which had all but required being tested -- is neutralized. Traction was gained during the afternoon. Overnight action's new info... Flat-to-higher ranging has been relatively narrow. At one point dipping to 2208.50, and eventually recovering to probe Tuesday's highs, a new high print at 2213.00 seems almost accidental. That happens to be this morning's bias-up signal calculation, derived from yesterday's intraday patterns. In any case, the fresh high hasn't attracted new sponsorship. Its quick reaction back down into the range has been holding 2210.00 as support. If, then... This isn't the first time that only one piece of "unfinished business above" was outstanding. It was the same piece, the next higher objective at 2222.00 which was put into play by closing above 2192.00 two weeks ago. That's how last Wednesday's session was greeted, and it resolved poorly. Gapping up formed an anchor that yesterday finally retested, one week and a 64-point round trip later. Traction gained by yesterday afternoon's rally suggests the morning will trend up, too, regardless of gapping up or down. The setup can be inverted by gapping down under yesterday's 2204.50 noon hour low, but I would still be suspicious if the 2206.00 afternoon bias environment low were broken. Otherwise, 2220.00 is in-play until proved differently. First Trade... [Click here to view the Bias parameters] Exiting the open at 9:45 above 2215.50 would be likely to trigger the 2213.00 bias-up signal at 10:15. Exiting the open under 2209.00 would be unlikely to trigger bias-up.

Barely triggered grace period for bias-up. Opening range developed for so long that its eventual break higher came far too late to trigger the 2113.00 bias-up signal. But a late surge's errant tick did barely touch 2113.00 within 3 minutes of 10:15 to invoke the grace period through 10:30. Anyway, yesterday afternoon's rally gained traction, so this morning is likely to trend up. So, probing above 2113.00 at 10:30 would be bullish in two regards. Not yet probing higher by then would be bearish -- at least providing context for any higher highs to resolve poorly. The late extension high, and surging only to 2113.00 and the overnight high, suggest that optimism still hasn't become excessive. And from a contrarian perspective, that still suggests more upside.

WED afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above  2218.00 2217.00 ...would target  2222.25  2222.00 Bias-down: under  2209.00  2208.00 ...would target 2202.50  2201.50 Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED 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.

Hyperbolic relentless rally probing new highs. I've been repeating in the chaRTroom to reconsider stepping in front of persistently overbought 3-mijnute RSI. It is usually very unprofitable, except for one time, with many more points and much more time than expected in between. Today's example is already 19 points  and three timing windows long. Meanwhile, all "unfinished business above" is now fulfilled. At least, all that was required up to the 2220.00 objective which triggered two weeks ago above 2192.00. This afternoon's 2222.00 bias-up target was exceeded in time to renew the bias-up signal, next targeting 2232.25, which is being pierced now by 2 points. Until persistently overbought 3-minute RSI is undone, any reaction down would be only temporary. And it would likely target 2222.00. Otherwise, there is no requirement for a temporary dip, and room for noise above 2232.25  is 2235.25-2237.00. Today's only signal triggered above 2210.25, and no pullback limit has been violated. This isn't the largest single signal we've ever traded, but it's by far the largest single buy signal.

No traction from the bias environment lapsing above the noon hour high, since the 3:10-3:20 proxy window didn't trend to fresh highs. Not for lack of proximity, or for lack of trying. Fresh highs were probed up to 2236.50 during the window, but not maintained upon its exit. None of which prevents extending higher anyway, which the balance of the session did up to 2241.25. Reacting down to 2136.00 was recovered almost entirely into the cash session close, before reacting down as much again into the futures close. Just as closing above 2192.00 had put into play 2220.00, now closing even higher is targeting 2244.75 or 2252.50. Unless Thursday were to close under 2220.00. 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 .0010:15 ET) SPX ES Bias-up: above  2241.00 2234.75 ...would target  2246.25  2240.25 Bias-down: under  2233.00  2227.00 ...would target 2228.00  2221.75 Signal status:NO-BIAS, TESTED BIAS-UP SIGNAL 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.