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 21-point rally from its  2144.00 low had recovered the morning pullback and also its gap up, then 61.8% of last Friday’s range at 2164.00. No unfinished business was left outstanding, below having fulfilled the morning’s downside objective at its low. The afternoon’s no-bias environment was essentially maintained, despite testing its bias-up signal and then breaking higher five minutes before that would normally be acceptable. But the late break was triggered by a headline — not by excessive optimism — and relevant levels the break recovered were maintained through the close. Still, trending did not gain traction.

Overnight action’s new info…
The rally’s momentum eventually resumed, carrying price slightly higher to 2167.00 before midnight. That happens to be this morning’s bias-up signal, which is calculable resistance. Narrow ranging at the high started drifting back down ahead of Europe’s opens. That extended eventually to a 3-point deficit from yesterday’s cash session close to 2160.75.

If, then…
The overnight high was the first probe into last Thursday’s range since Friday’s break under it. The gap up that was indicated initially overnight must be recaptured pre-open in order to resume the rally this morning. That’s both because gapping up would dismiss the rally not having gained traction yesterday afternoon, and because the rally has been tenuous anyway. Add to this that natural resistance at last Thursday’s “higher prior lows” are not being tested. The alternative isn’t necessarily for the trend to reverse back down, but there is plenty of room below for backing-and-filling.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2163.00 would be unlikely to trigger the 2167.00 bias-up signal at 10:15. Exiting the open under 2155.75 would be likely to trigger the 2157.50 bias-down signal. Exiting the open above 2170.00 would be likely to trigger the 2167.00 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…
Tuesday’s rally began after first retesting the 2133.25 overnight low by 2 ticks. Reacting up quickly touched 2148.25. Its correction was retraced entirely, in time to extend the recovery during the noon hour to attack 2153.00. Bias-up was confirmed by slightly higher highs at 2154.00, ensuring the 2155.00 bias-up target would become “unfinished business above.” The balance of the session hovered choppily just under that objective.

Overnight action’s new info…
Eventually dipping, Tuesday morning’s highs were probed by 1 point down to 2147.00. Already having firmed into Europe’s opens, a surge was triggered that extended up to 2158.00. That was short-lived, as it quickly became the head of a Head & Shoulders reversal pattern. Its reversal leg plunged, piercing yesterday morning’s highs by only 1 tick has now reacted back up to 2152.00.

If, then…
Hovering yesterday afternoon just 1 point under its 2154.00 target is pessimism, which can be bullish from a contrarian perspective. Surging overnight 3 points through its outstanding target illustrates the effect of pent-up demand created by the delay. The overnight high’s brevity suggests there remains enough pessimism to enable another rally post-open. But it also confirms the recovery remains tenuous. Resuming the rally this morning would still be credible, presumably by gapping up. “Unfinished business above” at 2175.50 could be further delayed by a morning dip, and altogether avoided by downtrending that breaks under 2143.50.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2151.25 would be unlikely to trigger the 2155.00 bias-up signal at 10:15. Exiting the open above 2157.50 would be likely to trigger bias-up. Exiting the open above 2161.75 would be likely also to exceed the 2160.25 bias-up target through 10:15 to renew the 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…
Already gapping down to its next objective at 2149.00, Friday’s decline extended even deeper during Monday’s open to 2141.25. Recovering back to the open never gained traction, and the balance of the session trended down to fresh lows at 2136.50. Closing at 2138.00-2139.00 held the deepest level that still allows the decline to be considered only a temporary pullback. No unfinished business was left outstanding.

Overnight action’s new info…
Dropping eventually to 2133.25 was unable to extend before recovering and reversing sharply higher to 2154.00. That’s 4 points above the intraday high. But Europe’s weaker opens were more focused on the ongoing Deutsche Bank story, now joined by Volkswagen’s saga, and a 61.8% pullback has touched 2140.75. Its reaction just bounced up to the 2146.00 bias-up signal.

If, then…
Was Monday’s drop caused by concerns that Trump, presumably being bad for stocks, might that night’s debate? Overnight action reflects that the market also believes his election chances diminished. More relevant to this morning’s price action is whether the overnight rally has compensated for yesterday afternoon’s missed short-squeeze setup. Its measurements would qualify it, which would be bullish, since the short-squeeze’s alternative was to resume the decline. Opening back under  yesterday afternoon’s last narrow range at 2138.00-2141.00 would put the decline back on-track. Otherwise, the open should still gap up to and or through yesterday’s 2149.00 high to make rallying today any likelier.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2149.00 would be likely to trigger the 2146.00 bias-up signal at 10:15. Exiting the open under 2143.50 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…
Last week left one piece of “unfinished business above” .at 2175.50. That’s 3 points above Thursday’s high. The context of there being unfinished business above means that Friday’s slide to 2159.00 is a temporary detour. Its session low filled the gap back down to last Wednesday’s close, and held it. No other unfinished business was left outstanding.

Overnight action’s new info…
Relatively narrow ranging at Sunday night’s open offered a false calm. But then price slipped under Friday’s lows to test 2152.00. Fueled by what appears to be Deutsche Bank’s final chapter seems to have begun, with a bailout being dismissed by political leadership, Europe’s opens triggered a plunge that attacked 2144.00. A double bottom there enabled a bounce to 2149.00, which is struggling to improve any further.

If, then…
Extending Friday’s drop intraday would have next targeted at least 2149.00. So, 2149.00 now serving now as resistance overnight suggests the drop is an extension of the same sponsorship much more so than it may be a new leg. Extending down any deeper intraday would next target “lower prior highs” down to 2143.50, which were attacked to within 1 point overnight. Room below it to 2138.00 can be tested before suggesting that unfinished business above at 2175.50 won’t be tested soon. Meanwhile exiting the weekend with extreme sentiment is often a sentiment extreme, and the open is vulnerable to absorbing and rejecting the drop and reversing it back up sharply.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2146.00 would be likely also to exceed the 2149.00 bias-down target at 10:15 to renew the bias-down signal, next targeting 2143.50. Exiting the open under 2152.00 would be likely to trigger the 2155.00 bias-down signal at 10:15.

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 gap up to 2167.50 still had room to test “higher prior lows” at 2172.50, which it did, and which it held. Its eventual reaction down attacked 2164.00 during the afternoon’s bias-up environment. That bias-up influence enabled a complete recovery to retest 2172.50. But it didn’t prevent another dip closing essentially unchanged from the opening print. That’s a lot of intraday volatility, in a moderate range, to net no movement from the open. “Unfinished business above” was left outstanding at the afternoon’s 2175.50 bias-up target.

Overnight action’s new info…
Can other bias-up influences rescue another drop? Narrow ranging around Thursday’s 2167.50 open/close extended into Europe’s opens. A blip-up to 2169.50 was reversed down more substantially to probe under Thursday’s lows to 2163.25. Its recovery attempt is testing the initial overnight range’s lower-end.

If, then…
Thursday afternoon’s probe of fresh session lows developed during a bias-up environment. That context had all but assured it wouldn’t extend, and in fact, its recovery probed back above its origin. Momentarily, which was long enough to validate the context. Having lapsed, the bias-up environment no longer offers context. But Thursday afternoon’s bias-up target remains outstanding, and should ultimately prevent extending down. Leveraging this attraction above would help to recover the overnight probe under yesterday’s lows — whether before the open, or after gapping down. Since yesterday’s ranging gained no traction for the overnight rally’s effort, probing fresh highs today without gapping up would be very vulnerable to reversing back down sharply  Regardless, this being a Friday, the morning’s bias tends to extend through the noon hour.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2163.50 would be unlikely to trigger the 2161.25 bias-down signal at 10:15. Exiting the open under 2159.50 would be likely to trigger bias-down.