The second signal fired for today is the 90-10 High Continuation. This signal originates from the 80-20s set-ups as described in "Street Smarts". But, rather than using the 80-20 guidelines, the parameters have been narrowed to 90-10, thus reducing the pattern's frequency of occurrence, but increasing its probability as a forecasting tool.

The 90-10 High Continuation signal is fired when the day's close is within the top 10% of the day's range. This signal is telling us to expect morning continuation of the upmove.

Chart created by Tradestation.

On the S&P; Half Day chart, all three of our Cycle Indicators moved higher with yesterday's activity. Cycle Indicators imply higher to sideways trading for today.

Economic reports on today's agenda include the Producer Price Index and State Unemployment Initial Claims at 7:30CT, the Quarterly Services Survey at 9:00CT, and the EIA Natural Gas Report at 9:30CT. Note that Friday is "Quadruple Witching" (stock index futures, stock index options, stock options, and single stock futures all expire). There is a tendency for the index markets to rally during the last hour of trading on the day before options expiration, and to sell-off during early trading on the next day. Scalp traders might want to be looking for reasons to get long during the last hour with the intention of exiting before the close.

The ADX level on the 5 minute chart is above a value of 30 (see ADX charts below), indicating that the trend to higher prices is still intact in this timeframe. If we were triggered into a long position by a price reversal pattern and/or Oscillator Divergence near the 5 minute 20EMA, we would have the makings of a Holy Grail setup. A trade based in part on a Holy Grail pattern can take as its minimum profit target a return to the most recent swing pivot extreme, which would be yesterday's 1531.75 high. If the move to that level can occur on Momentum Confirmation, there should be even more upside in the making.

The ADX level on the 60 minute chart is below a value of 18. When this occurs, we know that it is a good time to keep an eye out for any developing triangles, wedges, flags, or channels in the respective time frames. We can use breakouts from these patterns as either a trigger into a trade or to help determine directional bias.

Both the 2 Day ROC Buy and 90-10 High Continuation signals are telling us to look for longs in today's early trading. The ideal setup would entail corrective action towards one of the support levels directly beneath yesterday's closing price, the most significant being that of the 1524.75 Daily Pivot. If price were able to reach this zone as higher timeframe 20EMAs came up to meet it from below, we'd have an extra reason to go long. A price reversal pattern and/or Oscillator Divergence can trigger us into the position with the 90-10 High Continuation signal telling us to expect yesterday's 1531.75 high to be exceeded. Use similar price and oscillator behavior characteristics to determine an appropriate exit point above this level.