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…
Thursday was greeted by the prior afternoon’s slide from 2273.00 to 2243.00. Prior lows had held through the close, and attractions above were outstanding. A credible recovery would have rallied almost immediately, but Thursday morning’s rally to 2267.75 — though sizable — began too late. It was retraced to within a couple of points of its 2251.00-2252.00 open, with the close bouncing back up to 2260.00. Oversold RSIs were left outstanding at the 2252.75 low.

Overnight action’s new info…
Another choppy night of sideways action almost greeted this morning’s open. But a rally is already being attempted from the 2256.50 overnight low, and it is now in positive territory attacking 2264.00.

If, then…
Quadruple witch expiration has some unique nuances, but today is mostly influenced by Friday Factors. Like the morning’s bias tending to persist through the noon hour. Maintaining a gap up would be bullish. But oversold RSIs below still require a retest. And the bullish WedEX influence doesn’t begin until coming out of the noon hour.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2265.50 would be likely to trigger the 2264.00 bias-up signal at 10:!5. Exiting the open under 2261.00 would be unlikely to trigger bias-up.

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…
Wednesday’s FOMC reaction followed a morning dip that had recovered to trigger the afternoon’s 2066.75 bias-up signal. The knee-jerk reaction fulfilled the 2271.75 bias-up target and attacked Tuesday’s 2273.00 high. The next hour was exactly different, plunging 29 points to 2243.00. Even before retracing the final hour’s bounce, sellers had gained traction from exiting the bias environment under the noon hour’s low, and the proxy window trended down to fresh lows.

Overnight action’s new info…
Bouncing back from Wednesday’s late dip settled into a relatively narrow, directionless, choppy range between 2251.00-2257.00. The upper-end is essentially this morning’s bias-up signal. It was being tested again when the BOE policy statement (unchanged) triggered a drop back to the range’s lower-end. And slightly lower, soon piercing under 2250.00.

If, then…
Yesterday’s lows probed twice under Monday’s 2247.00 prior lows, and managed barely not to close below them — a 2 point margin by the cash session close, and 5 points at the futures close. That prior low was itself the product of testing “lower prior highs,” so returning to it suggests that it will — repeat: will — break lower. Eventually. Meanwhile, price remains in the 2273.00 interim high’s orbit, which keeps open the door to retesting it. But that door must be entered almost immediately to avoid oversold RSIs at 2243.00 sucking price down into a multi-session pullback targeting 2215.00 and 2205.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2258.50 would be likely to trigger the 2256.75 bias-up signal at 10:15. Exiting the open under 2253.25 would be unlikely to trigger bias-up. Exiting the open under 2244.25 would be likely to trigger the 2246.75 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…
Tuesday’s gap up to Monday’s 2259.00 high was not rejected, all but dictating the balance of the session’s direction. Which was up. A lot. The 2270.00 objective to retesting Sunday night’s high was exceeded, only once, and by 3 points going into the afternoon bias environment. It reacted down to 2265.50 coming out of the afternoon bias environment, and a bounce back up to 2270.00 held its retest as price ranged sideways through the last 60-90 minutes.

Overnight action’s new info…
A narrower version of the sideways ranging of yesterday’s last timing window has persisted overnight. Lows have touched 2265.00, while the range’s upper-end has been defined by 2268.25 — which is being retested now.

If, then…
Overbought 1-minute and 3-minute RSIs during the formation of yesterday afternoon’s 2273.00 high suggests it will be retested. Only 1-minute RSI was actually overbought during its highest bar, but closing within proximity of it has reinforced its attraction. Trending ahead of an FOMC statement would be unusual, so the overnight paralysis represents some degree of normality. But rallying relentlessly for seven days ahead of the event makes today far from normal, today already being the most opportunistic day of trade setups. Currently, no “unfinished business above” remains outstanding, and no defensive posturing ahead of this afternoon’s events suggests more upside into and/or out of them. Some negative reaction should be part of the mix at some point, and probably also some fresh high.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2266.75 would be unlikely to trigger this morning’s 2270.75 bias-up signal at 10:15. Exiting the open above 2272.25 would be likely to trigger bias-up.

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…
Despite Sunday night surging 10 points to new highs attacking 2265.00, Monday’s open back under Friday’s highs 2254.25 had isolated the new highs to the overnight session. A post-open surge to 2259.00 was retraced in time to somewhat similarly isolate it. After extending down to test 2247.00 during the noon hour, the balance of the session hovered 1 point higher in negative territory.

Overnight action’s new info…
A quick dip back down to Monday afternoon’s 2247.00 lows was recovered back up to the afternoon’s highs. Its resistance began melting away ahead of Europe’s opens, but that’s when it disappeared altogether. Now yesterday’s post-open surge has been retraced to within 1 point at 2258.00.

If, then…
An observation we’ve discussed here for a couple of months is that the market seems very willing to embrace getting past the long-anticipated rate hike. Think in terms of ripping off the band-aid, or meeting future in-laws. I’ve noted this whenever strong economic reports have at least temporarily triggered a price surge that previously would have triggered selling. Well, tomorrow afternoon’s FOMC policy statement brings an opportunity to get the event behind us.
…Regardless of the knee-jerk reaction, pessimism should at some point be expressed by selling. Crouching defensively at some point ahead of the news would be appropriate, too. Yesterday’s dip was too modest to qualify as pessimism. As noted, Monday’s patient pessimism and ineffectual optimism were only potentially bearish from a contrarian perspective, and not yet outright bearish.
…So, why the overnight bounce? Consider its source. The optimism seems more inspired by the relative favor bestowed by a domestic rate hike. Will Tuesday’s intraday crowd buy into that sentiment and continue marching higher post-open with a stiff upper-lip? Their reward could be a retest of Sunday night’s 2265.00 high, and also to neutralize the “unfinished business above” of an eventual new trend high close. That would be a trap, to remove upside attractions when they’ll be needed most. Reversing back down this morning could still be part of a multi-session pullback, with likely objectives of 2215.00 and probably also 2205.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2259.00 would be likely to trigger the 2256.50 bias-up signal at 10:15. Exiting the open under 2253.25 would be unlikely to trigger bias-up.

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…
A third consecutive narrowly ranging overnight Globex session was followed by a third consecutive intraday rally that ended above the morning’s highs. The morning held a test of the next higher upside objective at 2247.25 and the afternoon held tests of its higher objective at 2252.50. Intraday patterns targeting 2254.25 defined the cash session highs No traction was gained, but a new trend extreme close on Fridays requires at least one eventual new trend high close.

Overnight action’s new info…
Agreement among non-OPEC producers to limit production triggered a 10-point surge at Sunday night’s open, attacking 2265.00 just 15 minutes later. It was steadily retraced during the next 5 hours, despite its catalyst Crude Oil maintaining its gap up. Except for that round-trip, the balance of price action has resembled the three prior consecutive overnight Globex sessions — choppily fluctuating around unchanged, most recently touching 2151.75. Currently a bounce has recovered again to unchanged at 2254.25.

If, then…
This weekend’s Saturday Review discussed reasons why a multi-session pullback would not be inappropriate to begin today, regardless of whether fresh highs were probed first. I can update that now to say that it remains as true, despite last night’s probe higher. But now that fresh highs have been probed, reversing down intraday would be likelier if they’re isolated to the overnight. Despite its substantial 10-point girth, last night’s opening surge had no complexity that would otherwise have required its intraday retest. It’s interesting that Sunday night’s open didn’t gap up before surging, almost grudgingly moving to discount Crude Oil’s reaction to this weekend’s news, which had gapped up. Similarly, the open’s surge was retraced while Crude Oil continues to hover at its gap up levels. If a multi-session pullback were going to begin today anyway, then compensating for the artificial overnight surge may exacerbate its depth.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2251.50 would be likely to trigger the 2253.25 bias-down signal at 10:15. Exiting the open above 2256.00 would be unlikely to trigger bias-down.