The First Trade

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…
Monday gapped down to the 2268.25 target of Friday’s late sell signal. That also tested “lower prior highs” from Wednesday and Thursday. And ultimately after touching 2263.50, the morning’s 2265.50 bias-down signal held. But the reaction stopped short of filling the gap back up to Friday’s 2271.25 close. Such pessimism persisted through the session, without producing a break lower. The morning’s 2275.50 objective was left outstanding.

Overnight action’s new info…
Monday’s late dip to fresh afternoon lows at 2264.00-2265.00 barely delayed extended much lower. First dipping to 2262.00 was consolidated, and then extended to 2259.50 soon after midnight. But a steep rally greeted Europe’s opens at 2266.00. A quick reaction down attacked 2262.00 and soon recovered entirely.

If, then…
Of two or three bullish templates at this stage, overnight action is tracking one — isolation. Probing a fresh low overnight can be isolated by maintaining an open back above Monday’s lows. The minimum reward for this setup would be to probe above Friday’s 2277.00 high. Now that fresh lows have been probed overnight, also rejecting a fresh post-open low could reverse momentum up intraday. Regardless, not exploiting either bullish setup this morning would reinforce Monday’s break. And that would essentially point down into Wednesday morning, or longer, to 2247.00 or 2235.50.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2266.00 would be unlikely to trigger the 2263.00 bias-down signal at 10:15. Exiting the open under 2268.50 would be unlikely to trigger the 2271.50 bias-up signal.

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…
While all eyes have been on Dow 20k, which was attacked Friday to within 1 point, S&Ps fulfilled our long-awaited retest of the 2273.00 prior high. Its 2275.50 objective was probed up to 2277.00 during the noon hour. The balance of the afternoon fluctuated choppily around 2275.50, back down to 2273.00, and then another couple of points lower into the close. Closing above 2275.50 would have put into play the next higher objective, but there’s still room for noise up to 2278.25. Meanwhile, also holding the 2273.00 prior high robs the rally of some momentum. But Friday’s close was the trend’s highest, yet.

Overnight action’s new info…
Sunday night’s open began with an errant tick touching 2270.50, and then reversed up steadily into Europe’s opens. Attacking 2275.50 resistance to within 1 tick was vulnerable, and that vulnerability has resulted in a 7-1/2 point slide to 2267.75.

If, then…
New trend high closes on Fridays require at least an eventual higher close before a durable decline would be credible. Which doesn’t prevent a near-term correction from beginning  And if a correction is beginning, it may last only several day, or else it could last several weeks. Its first day can help to forecast which. Gapping down doesn’t prevent recovering intraday — in fact, the 2268.50 target of Friday’s late sell signal triggered under 2273.75 was met and held (so far) overnight. Recovering today can’t yet be dismissed, let alone already producing that next higher close. Regardless, fresh highs could be probed today without being maintained through the close. Otherwise, triggering a bias-down today would be likely if a correction is already underway.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2273.00 would be unlikely to trigger this morning’s 2275.50 bias-up signal at 10:15. Exiting the open above 2268.50 would be unlikely to trigger this morning’s 2265.50 bias-down signal.

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…
After two consecutive updays, Thursday was likely to offer another upleg at some point, so long as sellers had not retaken control at the open. Sellers did not retake control at the open, despite having drifted downward overnight to test 2259.00 and gap down slightly. Quickly filling the gap back up to Wednesday’s 2264.50 close was the morning’s only rally. The morning eventually plunged to 2254.00 in reaction to Crude Oil tumbling. The afternoon trended back up, retracing all of the morning’s drop. But only all of the drop, and not any higher, let alone closing above the morning’s high.

Overnight action’s new info…
Still no higher high as price has drifted flat-to-lower ahead of this morning’s Employment Situation report. The 2261.50 low was touched through Europe’s opens, bouncing since then back up to 2264.50.

If, then…
The most bearish factor currently is not what sellers did yesterday, but what buyers did not. An overnight slide and morning plunge each were retraced separately. But neither retracement was reversed above their drop’s origin. That leaves this week’s recovery attempt vulnerable to this morning’s catalyst, the Employment Situation report. It’s not being greeted from the position of strength that would have been offered by closing positive. An initially negative knee-jerk reaction down could still be absorbed and recover, but must be absorbed and recovered quickly to set a bullish tone for the morning. The reaction to the day’s two later Fed speakers has potential to be bullish, but their anticipation is likely at best to inhibit optimism. Gapping up must still be maintained through the open to expect extending higher into the afternoon.

First Trade…
[Click here to view the Bias parameters] No preliminary indications are available before an Employment Situation report.

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…
Extending Tuesday night’s rally required almost immediate evidence at post-open Wednesday. And 8-point surge attacking 2264.00 did that, but also expended all available near-term buying pressure. That’s how Tuesday morning’s surge resolved, but not Wednesday. The morning’s 6-point correction resolved up to fresh highs at 2267.00, closing just above the open’s surge.

Overnight action’s new info…
Flat-to-lower ranging attacked 2260.00 before Europe’s opens. Its reaction didn’t resume the rally, while ranging choppily around yesterday morning’s ~2264.00 surge high. Until the recent several minutes, which broke lower to fresh lows touching this morning’s 2259.25 bias-down signal.

If, then…
The two-day rally has retraced all but 2-3 points of last week’s decline from its 2269.50 high. And all but 6 points from the 2273.00 high. Two consecutively higher counter-trend closes have properties similar to a confirmed breakout — No higher close is required, but a pullback would likely recover. And a pullback today requires immediate evidence, similar to yesterday’s opening setup for extending the rally. So, regardless of gapping down, not sliding through the open should eventually resume the rally today, but sliding through the open is probably not a near-term buying opportunity.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2257.50 would be likely to trigger the 2259.25 bias-down signal at 10:15. Exiting the open above 2261.75 would be unlikely to trigger bias-down

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…
The new year arrived with a gap up from 2236.50 and rally Sunday night, a gap up and rally through Monday’s open up to 2259.50, and then a plunge through the morning down to 2239.50. The plunge retraced only the overnight lows, which was still 4 points above Friday’s close. That was 2240.50, which had been relevant support — albeit brief support — on Friday. Being a new year, it was tested throughout two timing windows, and then broke higher during the 3:37-3:52 position-squaring window to its 2252.25 target..

Overnight action’s new info…
Except for the open’s brief dip to 2251.00, yesterday’s late rally has only extended higher overnight. The slope is shallow, but steady, eventually touching 2257.00. Reacting down nearly 3 points has recovered entirely.

If, then…
Gapping down under yesterday afternoon’s lows could have formed a “session-long decline,” which would have proved instantly that the late surge was a false break. That’s not happening. Gapping up isn’t immune to reacting down post-open, but the overnight gain and late surge can absorb a lot of selling pressure before damaging their uptrend. that’s if there’s a reaction down, at all. The overnight rally stopped pessimistically short of resistance at 2257.50 before its deepest correction. That pessimism can be bullish from a contrarian perspective. A morning rally will be likely so long as any post-open reaction is shallow, or simply avoided. Otherwise, a post-open dip will have room before targeting a retest of yesterday’s lows — which is required eventually, and now even likelier to break lower at that time.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2250.50 would be unlikely to trigger the 2253.50 bias-up signal at 10:15. Exiting the open above 2255.50 would be likely to trigger bias-up.