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 had gapped down 10 points to test its 2127.75 bias-down target. Fluctuating around it ultimately held to avoid renewing the bias-down. That base launched a surge to 2140.00 — and that was just the morning. Retracing the morning’s surge by 13 points touched 2127.25 and still had time for an attack on 2136.00. Overbought RSIs requiring an eventual retest were left outstanding at the high.

Overnight action’s new info…
Drifting lower choppily, and eventually aggressively, only attacked Wednesday afternoon’s low down to 2128.50. Firming into Europe’s opens then became extremely volatile, surging 8 points to 2139.00, dropping 9 points, and now attacking 2139.00 again.

If, then…
Is that pessimism? Overbought RSIs at yesterday’s 2140.00 high requires at least a retest, and now two surges have stopped short of touching it. The first surge’s complete retracement has been recovered almost entirely. From a contrarian perspective, hesitating to break higher and not exploiting reversal opportunities is potentially bullish. Eventually, probing fresh highs becomes almost obligatory. Not rejecting the probe would likely extend significantly higher to older unfinished business above at 2148.00 and potentially higher. Otherwise, not extending early fresh highs would remain vulnerable to triggering a domino effect that leads to probing under 2118.00 and lower.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2135.75 would be unlikely to trigger the 2138.00 bias-up signal at 10:15. Exiting the open above 2140.75 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…
Tuesday’s open back under Monday’s highs had isolated the overnight probe of fresh highs, which had fulfilled the 2150.00 objective. Retesting Monday’s 2140.50 low bounced high enough for long enough to avoid triggering bias-down. But its upside objective was ignored as the reversal down extended to enter the noon hour at the morning’s 2135.50 bias-down target. Bounces twice tested 2140.50 as resistance, and twice failed, again attacking 2135.50 into the close, making at least an obligatory probe lower likely. An offsetting test of the morning’s 2148.00 bias-up signal was left outstanding.

Overnight action’s new info…
Anxiousness ahead of AAPL’s post-close earnings is somewhat responsible for containing Tuesday afternoon’s range. Its negative reaction garnered sympathy as fresh lows developed quickly down to the 2132.00 area. Another downleg began at Europe’s opens in sympathy with Italian bank Monte Paschi resuming its slide. Fresh lows attacking 2126.25 have reacted up to test 2130.00.

If, then…
Tuesday’s open produced two normally powerful signals that happened to contradict each other. If they neutralized each other’s influence intraday, once seems to be winning out overnight. Isolating Monday night’s test of the 2150.00 objective has now reacted down almost 24 points. The decline’s timing has had weak-handed sponsorship at least twice — first, after yesterday’s open had held tests of prior lows, and now overnight. The overnight influence is legitimately bearish, but may be discounted sufficiently to prevent getting much more sympathy from intraday participants. Attracting sponsorship for a recovery need not be obvious immediately, but the overnight lows must hold to avoid probing well under expiration Friday’s 2123.25 low.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2125.00 would be likely also to exceed the 2127.75 bias-down target at 10:15 to renew the bias-down signal, next targeting 2121.25. Exiting the open under 2130.00 would be likely at least to trigger the 2133.50 bias-down signal at 1015. Exiting the open above 2133.50 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…
Monday’s 2145.75 gap up above last week’s range formed an anchor setup. Reacting down into its noon hour low held last week’s “lower prior highs” down to 2140.50. Bouncing through the afternoon eventually recovered enough to touch the opening print, stopping pessimistically short of touching fresh highs. The close qualifies as a breakout from a multi-session range. The breakout wasn’t optimal, since the session never actually broke its intraday pattern of lower lows and lower highs..

Overnight action’s new info…
Monday afternoon’s recovery gradually extended higher overnight. Slowly retracing Monday’s anchor setup never seemed optimistic, let alone impatient. The final upleg began at Europe’s opens, and probed above yesterday morning’s anchor to within 1 tick of the rally’s 2150.00 objective. The only sort of sentiment extreme has been by sellers, sliding quickly back down to unchanged at 2144.50 as while Italian bank Monte Paschi plunges.

If, then…
Extending Monday’s rally overnight doesn’t necessarily dismiss the potential to form a bearish “session-long decline” setup. It would be triggered by gapping down back under Monday afternoon’s 2142.25. The trigger wasn’t very far away as of Monday’s close, and not much further when fulfilling the 2150.00 objective overnight — which has been retraced entirely. There’s no assurance of retesting the overnight high, let alone extending through it. Probing positive territory post-open would prevent isolating the overnight optimism, and help to avoid what could otherwise be a very bearish day.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2149.00 would be likely to trigger the 2148.00 bias-up signal at 10:15. Exiting the open under 2143.75 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…
Thursday night’s slide had started sliding sharply into Friday’s expiration open. Its quick retest down to 2123.50 was reversed back up. Extending through the balance of the session retraced back to Thursday’s 2137.00 futures close, settling back at Thursday’s 2135.00 cash session close. Positive territory was avoided, in yet another session to be limited in some way by “ineffectual pessimism.” No unfinished business was left outstanding below.

Overnight action’s new info…
That’s a twist. Not Sunday night’s opening surge that attacked 2140.00. But its complete retracement, which avoided negative territory. Avoided negative territory, eked its way back up to 2140.00, and then surged to 2147.50 through Europe’s opens. “Unfinished business above” at 2145.50 was neutralized. The surge has been consolidating back down to 2143.50.

If, then…
Ineffectual pessimism, meet optimism. Is it effective optimism? Friday was the fourth consecutive session for its high to be labeled as pessimistic, somehow stopping short of resistance or not exploiting an opportunity to extend through it. Not yet reacting down intraday has qualified each instance of pessimism as ineffectual — not so much regardless of the next session’s reaction down, but because the next session’s reaction down either held support or recovered. Ineffectual pessimism doesn’t ensure resolving up, and that resolution may be only an obligatory break higher that soon reverses back down. Ineffectual pessimism is gone, as the overnight optimism suggests the pattern is ready to resolve. If post-open sponsorship doesn’t launch a bigger rally leg, then its reaction could retrace back down to recent lows.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2143.00 would be likely also to exceed the 2140.75 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 2139.00 would be likely at least to trigger the 2135.50 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…
Thursday’s intraday drops each bounced sharply, and each bounce failed. Only  one probed a fresh intraday high, retracing the drop from 2141.25 that was triggered by Draghi’s comments. That one resolved down deepest to 2126.50. Two more made lower highs resolved down, and the session ended at 2135.00. Newly created “unfinished business above” at 2141.50 lies under the previously created objective at 2145.50.

Overnight action’s new info…
Initially trying to bounce again was cut short quickly at 2138.50. The balance of the night has trended down in an orderly series of lower lows and lower highs. A 4-point bounce from 2128.75 is now retraced entirely, hovering a couple of points above yesterday’s lows.

If, then…
Thursday’s bounces weren’t the first to stop pessimistically short of resistance in recent days. That’s potentially bullish from a contrarian perspective, and it has proved bullish recently, so the same bullish resolution is still getting a benefit of the doubt. But the waiting period isn’t indefinite, and it’s pent-up buying pressure can become irrelevant if expiration isn’t exploiting it already soon after the open. Finding support at lower levels to launch a bigger rally would not be unusual — except for expiration, which is often single-minded in its intraday trending. Regardless of gapping down, trending up from the open remains possible, and still likelier, but also necessary to avoid potentially trending down into the weekend.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2133.00 would likely avoid triggering the 2130.50 bias-down signal at 10:15. Exiting the open under 2127.75 would likely trigger bias-down.