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…
Wednesday’s open gapped down at or under Tuesday morning’s 2119.00 low, and quickly rallied 22 points to attack Tuesday’s high up to 2141.50. Oh, and Tuesday’s low was probed by 91 points overnight. So, not only was the crash isolated to the overnight, but the intraday exploited it, so sellers were all but marginalized for the day. Bias-down signal and target held the morning’s correction that attacked 2125.25, and the balance of the session rallied to fresh highs at 2166.50. The rally gained traction by entering the final hour above the bias environment’s high and then trending up through the 3:10-3:2- timing window. That didn’t prevent a late corrective dip down to 2156.00.

Overnight action’s new info…
Wednesday’s late pullback consolidated relatively narrowly around 2160.00 until midnight. Suddenly surging to fresh highs peaked within 1 tick of this morning’s 2171.00 bias-up target. The rally extended out of Europe’s opens and tested the next higher objective’s 2180.00 area by 2 ticks. Its reaction back down to 2171.00 was retraced by 8 points, but now another reaction down is testing 2171.00.

If, then…
Wednesday afternoon’s traction makes Thursday morning likely to trend higher, often regardless of its opening print. We’ll want that confirmed by there being almost no delay in rallying post-open Thursday, since the next higher target in the 2180.00 area is already fulfilled overnight. The next higher objective would be fresh highs probing 2-3 points above 2184.25. Otherwise, inverting the morning’s bullish influence into a pullback would target the 2167.00 area. Both legs are possible today, in either order — so today’s session would be more bullish if the morning corrects down before resuming the rally, and more bearish if fresh highs were to print first.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2174.00 would be likely also to recover the 2171.00 bias-up target at 10:15 to renew the bias-up signal, which would essentially next target 2180.00. Exiting the open above 2168.00 would be likely to trigger the 2164.25 bias-up signal at 10:15. Exiting the open under 2161.00 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…
Things got off to a normal start Tuesday. Not gapping up had  trended down instead, probing under the overnight lows. That was appropriate behavior since Monday’s rally had not gained traction. But then exit polling began claiming the market’s preferred candidate was leading the day’s vote. Despite having triggered the 2123.50 bias-down at 10:15, and despite only threatening to invalidate it at 10:30, the bias environment only rallied. The morning’s 2132.50 bias-down signal was recovered sufficiently to invalidate the bias-down at noon. The noon hour extended up to 2143.50, testing “lower prior highs” of the two-week old highs. The balance of the session ranged choppily back down to 2131.25.

Overnight action’s new info…
Early returns produced retests of Tuesday’s high, first up to 2144.25, and then up to 2152.50, probing the two-week old prior high. Then, quite similar to Brexit, results tightened in unexpected critical areas. I had described Tuesday’s session as being a very unstable base to the next rally attempt, and the evidence could not have come faster or clearer. Soon Tuesday’s “Hillary” rally was retraced to its 2119.00 low, and the same leg — almost the same bar — retraced Monday’s “Comey” rally to its 2102.75 intraday low.. Then last Friday’s lows of the decline were retraced entirely, too, plunging 22 points under it to 2057.25. Reacting up to 2082.00 was reversed down to 2028.50, finally effecting a collar that stopped the decline. That was at midnight, and an eventual bounce has extended to attack 2109.00. Its reaction down tested last Friday’s ~2080.00 lows. A bounce has been chipping away at resistance just under 2100.00.

If, then…
In yesterday’s post-market Wrap I described the multiple instances of excessive optimism: rejecting Tuesday morning’s bias-down, the morning’s inappropriate rally, its retracement holding above Monday’s prior high. At best, Tuesday’s rally had discounted a large portion of Hillary’s victory. Likely, it incorrectly anticipated a decisive decision. Surprisingly, it was blind-sided by Trump’s win. The pattern only favored a correction, but last night’s plunge is not out of bounds. The question is whether its near-term low — which is likely — will be durable. Probably not, because last night’s “new Globex trend extreme” requires an intraday retest, but the pattern suggests that a healthy retest will be prevented by optimism for repeating a Brexit-like recovery. So long as Friday’s ~2080.00 lows hold as support (preferably 2084.50) this morning can produce a bounce to 2121.25 or 2125.25 and possibly higher.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2077.50 would be unlikely to rally this morning. Exiting the open above 2104.50-2106.50 would be likely to rally this morning.

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…
Gapping up on the FBI’s Clinton news formed a “session-long rally” setup. It was less reliable for having formed over a weekend. But intraday timing windows complied, anyway, with all but one probing above its prior timing window’s high. The exception was the final hour, which dipped 5-1/2 points from attacking 2125.00. Rallying 10-1/2 points through to test 2130.00 could be dismissed for barely probing fresh highs while the position-squaring window had begun lapsing.

Overnight action’s new info…
Gapping back down slightly at the Globex open extended through the afternoon’s mid-day “lower prior highs” defined by 2123.50, and into the late pullback’s consolidation at 2121.25. The drop was fully retraced to retest 2130.00. Another reaction down is now attacking 2123.50.

If, then…
Continued compliance with Monday’s “session-long rally” would probe higher this morning, if not actually trend. The next higher attractions 2134.00 and 2138.00. But not gaining traction yesterday requires gapping up to launch any durable trend. So, rallying without gapping up would be likely to reverse down this afternoon. Neither gapping up nor rallying could repeat the overnight pullback, but probably not hold support at Monday’s mid-day “lower prior highs” that already held overnight. So, a pullback would more likely target 2118.25, and possibly 2113.50 before suggesting yesterday’s rally is actually reversing down.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2121.25 would be likely to trigger the 2123.50 bias-down signal at 10:15. Exiting the open above 2127.00 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…
Friday’s 2084.25 open was essentially flat with Thursday’s 2083.25 close, and soon probed Thursday’s late low under 2080.00 down to 2079.00. Bouncing into the noon hour to test 2094.00 didn’t prevent retracing it all into the weekend, the final weekend before this week’s U.S. Presidential elections.

Overnight action’s new info…
The FBI on/off effect was immediate. Both in terms of triggering a 26-point gap up to 2106.00, and in the overnight action only ranging around 2106.00. Choppily, down to 2103.00 and up to 2112.00. And now another attack on 2106.00 as support trying to bounce again.

If, then…
Room for noise under the decline’s 2082.00 target down to 2077.50 had been attacked to within 2 points. It does not become unfinished business below. But the gap back does, although it can be “filled” by proxy back down to Thursday-Friday’s 2094.00-2097.50 highs. Meanwhile, a corrective rally may be underway, especially so long as the opening 15 minutes of volatility gets out above 2108.75. The next set of “higher prior lows” begins at 2114.00, from which overnight action has hovered pessimistically short. The next higher set gets to 2120.00-2121.00, which is also a 61.8% retracement back to two-week old highs. Any higher would start targeting 2134.00 and 2138.00. After trending down into its close, gapping above the prior afternoon’s highs forms a “session-long rally,” but it’s intraday effects can be less reliable when there is a weekend in between.

First Trade…
[Click here to view the Bias parameters] The open is too far removed from the Bias parameters for any early indications.

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…
Recovering from sharply lower overnight lows didn’t held Thursday morning trigger bias-up, despite testing the bias-up signal. And only ranging choppily throughout the morning didn’t prevent the afternoon from triggering bias-down. The overnight attack on the decline’s 2082.00 target to within a couple of points had made it likely to be probed if ever revisited, and Thursday afternoon probed it by a couple of points. A very late bounce to a couple of points back above 2082.00 was enough to avoid “hold-short” although oversold RSIs accompanied the low.

Overnight action’s new info…
Thursday’s late bounce initially firmed, and eventually attacked 2087.00. The impending Employment Situation may be responsible (finally) for inhibiting trending. Hovering into Europe’s opens has since dipped back down to within 3 ticks of yesterday’s 2079.75 low.

If, then…
If Friday’s Employment Situation was influential Thursday, then it caused pessimism. That can be bullish from a contrarian perspective, by discounting an unfavorable reaction and stealing sellers’ thunder. That wouldn’t preclude there being an initially negative knee-jerk reaction, especially if the room for noise under 2082.00 down to 2077.50 hasn’t yet been touched. The target meanwhile remains in-play. Regardless, the weekend’s impending illiqiudity can cut either way. Maintaining a gap up above Thursday afternoon’s last relative high at 2088.00 could set a very bullish tone for the day. But the current trend is not a recovery’s friend. It’s difficult to reverse eight consecutive days of probing each prior session’s low without another fresh intraday low.

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

PROGRAMMING NOTE #1: There is no Saturday Review this weekend, so we’ll review the bigger picture during this afternoon’s Market Wrap… PROGRAMMING NOTE #2: Market Wrap will be done during the session’s last half-hour, specific timing TBA.