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…
Third time was a charm. Okay, fourth. Like Monday and Tuesday before it, Wednesday gapped up to 2140.00 and tried probing higher. Unlike Monday and Tuesday before it, Wednesday’s intraday reaction down to 2132.00 was recovered, and the retry was very successful. It helped to get the FOMC statement out of the way. As did the attraction to last Monday’s highs around 2152.25-2153.25. Probing it up to 2157.50 before the close gained traction, and took RSIs overbought.

Overnight action’s new info…
The potential if not likely pullback under 2153.25 never got underway, as the support was only overlapped by 2 ticks before Europe’s opens. Their response to yesterday’s rally encouraged a breakout from the shallow range. Fresh highs are now testing 2164.00.

If, then…
Having neutralized the attraction above back to last Monday’s highs, the recovery’s momentum is in search of a new objective. Yesterday afternoon’s rally had gained traction, but was also rewarded well enough to enable an overnight corrective dip. No dip, no correction, and no refueling to help sustain the stretched rubber band. Maintaining a gap up could extend higher this morning, but even that would remain vulnerable to reversing down sharply this afternoon.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2167.00 would be likely also to exceed the 2165.50 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 2162.50 would be likely to trigger the 2160.00 bias-up signal. Exiting the open under 2159.00 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…
Like morning, like afternoon? Tuesday’s gap up had failed two attempts to extend above 2143.00, and instead reversed down into and out of the noon hour to 2131.00. The afternoon’s weak-handed bounce to 2138.75 failed to gain traction above any relevant price at a relevant timing window. So it was retraced entirely back into the close. The morning’s “unfinished business below” at 2128.25 was attacked to within 3 ticks coming out of the close, which was enough to neutralize its attraction.

Overnight action’s new info…
Price was still hovering at Tuesday’s lows into the BOJ announcement, which triggered a spike down to 2126.25. It recovered as quickly, and the recovery extended substantially. Probing yesterday’s highs by 2 ticks up to 2144.00 finally reacted back down to test yesterday afternoon’s 2138.75 bounce high as support by almost 1 point..

If, then…
The overnight spike down not only tested yesterday morning’s unfinished business, which had been neutralized already, but also oversold RSIs at Monday’s low. Now indicated to gap up around 23142.00 for a third consecutive session, overbought RSIs at Monday morning’s 2146.75 high are likely to be tested. And it’s unlikely to offer durable resistance on the way up to last Monday’s highs around 2151.00. But it would have to done quickly this morning, and aggressively, before price action can become paralyzed by anxiousness ahead of the afternoon’s FOMC policy statement AND Yellen’s quarterly Q&A. Perhaps obligatory resistance around 2146.75 separates the recovery into stages, and still leaves enough time to react down from testing the prior highs.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2139.75 would be likely to trigger the 2136.00 bias-up signal at 10:15. Exiting the open above 2143.00 would be likely also to exceed the 2141.50 bias-up target at 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…
Monday’s gap up at 2139.00 extended quickly to attack 2147.00, consolidating around 2143.00 into the noon hour. A sudden 8-point plunge was followed by an 8-point slide back into Friday’s range at 2128.00 for the afternoon low. Bouncing back to the 2139.00 open was reversed back down to 2130.00, preventing 2134.00 from being recovered through the close. Overbought RSIs were left outstanding at 2146.75.

Overnight action’s new info…
Initially choppy, price gradually firmed to greet Europe’s opens back at Monday afternoon’s 2139.00 high. Consolidating there has broken higher to touch 2142.00.

If, then…
Despite falling short of it yesterday, a more substantial correction of Monday’s noon hour plunge up to 2141.50 had been likely. The overnight bounce has neutralized its test. So long as Tuesday’s open isn’t already reversing the overnight rally, then a retest of Monday morning’s overbought RSIs at 2146.75 is also likely. And that would have potential for extending to test last Monday’s upper-end around 2150.50. Opening flat-to-lower would be unlikely to resume the overnight rally, but not any more likely to reverse down sharply. Trending beyond the week-old range is still unlikely with BOJ and Fed statements looming.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2143.00 would be likely to trigger the 2140.50 bias-up signal at 10:15. Exiting the open under 2137.50 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…
Friday had gapped down back under 2134.00 and slid to attack 2123.00. Bouncing 10 points was retraced by an afternoon dip retesting 2123.00. RSIs were borderline oversold as support was chipped away, but the balance of the session retraced its midday bounce. Resistance held at 2134.00, so the distributive signal remains intact. Distributive action persists, resistance held when it had an opportunity to recover, and any unfinished business is below..

Overnight action’s new info…
Sunday night can be characterized as optimistic. Its flat open didn’t wait long before price suddenly spiked up 8 points to 2141.00. The wait was a lot longer before extremely narrow ranging around 2139.00 suddenly surged again to probe higher into Europe’s opens. Twice testing 2144.00 has come within 1 tick of Thursday morning’s 2144.50 high, and its overbought RSIs, both times reacting down under 2141.00.

If, then…
Friday afternoon’s buyers gained no traction, so rallying this morning requires gapping up, which is currently indicated. But it could face a new challenge if Thursday morning’s 2144.50 high were to hold a test as resistance — especially if its reaction were to exit the open back under Thursday’s 2140.00 and/or 2137.50 closes. Exiting the weekend with extreme sentiment can often be a sentiment extreme, and rallying ahead of this week’s FOMC and BOJ statements may be difficulty. Otherwise, successfully negotiating Thursday’s highs would next target “higher prior lows” beginning at 2149.00 to above 2150.50.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2143.50 would be likely also to exceed the 2141.50 bias-up target through 10:15 to renew the bias-up signal. Exiting the open above 2138.00 would be likely to trigger the 2136.00 bias-up signal at 10:15, unless Thursday morning’s 2144.50 high were tested first,.

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 open was in recovery mode from having probed Sunday night lows overnight, failing to reach the 2095.00 objective that had been put into play Wednesday afternoon. Two attacks on 2114.50 were held and reversed up sharply, to and through the relevant 2134.00 level, testing 2144.50 as the afternoon bias environment began lapsing. A sell signal at 2140.50 was probed twice, never deeper than its first 3 minutes, not until after the cash session close.greeted by three main influences. Overbought RSIs were left outstanding at the high, but buyers otherwise gained no traction.

Overnight action’s new info…
The pattern of substantial swings into expiration is still playing out. Thursday’s late sell signal under 2140.50 extended down without delay to its 2134.75 and 2132.25 objectives, which retraced the afternoon’s 1:20 print AND its bias-down signal. Then volatility disappeared, as price ranged narrowly back up to 2136.00. Europe’s opens broke the mood, triggering a couple of downlegs that have now tested support at this morning’s 2127.00 bias-down target.

If, then…
Not gapping up limits the potential for a morning rally, since yesterday’s buyers gained no traction. Maintaining a gap down under 2134.00 helps to reject the single close above it yesterday, which threatened the ongoing distribution pattern. The close must also reject any intraday probe above 2134.00, with the aid of only a slightly bearish WedEX. That, and the overnight decline’s momentum, which seems to be snapping back down after yesterday’s rally had stretched the rubber band. But regardless of opening level, the most reliable directional indicator will be how the first 15 minutes of volatility resolves its gap down.

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 2127.00 bias-down target through 10:15 to renew the bias-down signal, next targeting 2121.25. Exiting the open under 2130.50 would be likely at least to trigger the 2132.75 bias-down signal at 10:15. Exiting the open above 2134.75 would be unlikely to trigger bias-down.