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 needed only to fill the gap back up to Tuesday’s 2185.50 cash session close before it would be vulnerable to reversing down. The open did more than that, briefly probing above Tuesday’s last-minute 2186.75 high, and then reversing down, forming a Pivot Reversal structure. Reversing down persisted through the noon hour to 2177.50. The balance of the session trended back up to 2185.50. No unfinished business was left outstanding, but the morning’s Pivot Reversal structure identified buyers as weak-handed.

Overnight action’s new info…
Yesterday afternoon’s recovery had begun firming to greet Europe’s opens another point higher at 2186.50. The immediate reaction extended to fresh highs at 2189.25. That has since been retraced down to 2185.50 ahead of this morning’s ECB policy statement.

If, then…
Wednesday’s Pivot Reversal structure essentially requires a retest of the morning’s 2177.50 low. Not having done it already Wednesday makes it very likely to be done Thursday. So, gapping up and probing higher this morning would remain extremely vulnerable to reversing down sharply this afternoon. Regardless of the gap up that futures currently indicate, the actual open will depend more on reaction to the ECB monetary policy statement and ECB chair Draghi’s Q&A. Gapping up above yesterday’s high can ignore buyers not gaining traction yesterday, albeit probably only for the morning.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2189.00 would be likely to trigger the 2187.00 bias-up signal at 10:15. Exiting the open under 2183.50 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…
Tuesday’s open greeted the new week by surging back to Friday’s high, but holding its bias-up signal. Diving to the offsetting test of its bias-down signal formed the session low, all contained within Friday’s range. Recovering back up to the morning’s highs only ranged narrowly through the afternoon between 2180.50-2181.50. A late breakout was too late to be strong-handed sponsorship, but it extended up to 2186.25.

Overnight action’s new info…
Yesterday’s last-minute surge did not extend even a single tick higher, nor has it been rejected. But it has been retraced, although not immediately. A narrow 2-point range holding 2184.00 expanded suddenly to 3 points at Europe’s opens, dipping back down to 2182.75. Recovering back up to 2186.25 was reversed back into the range, and now back down to fresh lows at 2182.25.

If, then…
Tuesday’s lateness of its breakout doesn’t preclude extending higher, even without gapping up. But either scenario is less likely. Less likely, but still possible. However, extending much higher than a morning rally would be unlikely. And reversing back down would be likely. All of which applies to a rally attempt, which is not required, assured, or even likely. Meanwhile, having trended up into Tuesday’s close, gapping down back under Tuesday afternoon’s 2180.50 low could form a session-long decline. The setup would marginalize sellers buyers for the day, and could fill the gap at Thursday’s 2169.00 close down to 2166.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2180.50 above would be unlikely to trigger the 2177.75 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…
Friday’s gap up from 2166.00 quickly extended to probe Monday’s 2182.00 prior high by almost 2 points. Reversing back down 12 points through the noon hour still remained more than 5 points into positive territory. The balance of the session was influenced by the lack of influence, being a Friday afternoon, and price drifted back up to 2179.00 into the close.

Overnight action’s new info…
Sunday night’s open resumed Friday afternoon’s upward drift back up to 2182.00. That held through the night, before reacting down to 2175.00 during the Labor Day holiday morning. Monday night;s action has drifted back up to test 2182.25.

If, then…
Last week crossed its hump without breaking under prior lows, despite a couple of attempts. Now the holiday is being exited without yet converting the tests of support into a break above resistance. An early rally attempt would be more credible for extending higher than would a delayed attempt, but an early rally attempt would still be vulnerable to failure. Retracing Friday’s gap up could occur on any timetable.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2183.50 would be likely to trigger the 2182.00 bias-up signal at 10:15. Exiting the open under 2180.50 would be unlikely to trigger bias-up.

Proper context can start the day with a solid win and make all the difference.

Through the prior close…
Thursday morning’s plunge from 2172.00 down to 2154.00 was recovered up to 2168.50 during the noon hour, and the balance of the session ranged choppily sideways. The recovery’s momentum was spent, pre-payrolls anxiousness was looming, and holiday illiquidity wasn’t far behind. Last Friday’s low was likely to be probed and not just attacked such as at Wednesday’s low. And it wasn’t likely to be broken by an attempt after Wednesday’s close. So, the recovery quickly followed after neutralizing Wednesday’s “unfinished business below” at 2156.50.The afternoon’s 2170.75 bias-up target was left outstanding..

Overnight action’s new info…
After one night’s absence, narrow ranging has returned. That’s now four out of five overnight ranges limited to 4-5 points. Where the prior instances were due to nothing stimulating enthusiasm, now price is constrained by fear of coming news.

If, then…
I’ve noticed the market hasn’t rallied this week on traditionally bullish news of weaker economic reports. Those data would suggest the Fed won’t raise rates, which the market now seems to want — if only to get it over with. An initially negative knee-jerk reaction to the prospect of a hike can’t be avoided, nor should it be. But patterns suggest the negative reaction would likely be only temporary. Weaker payrolls would suggest the opposite, triggering selling into the weekend — especially now that last Friday’s low was chipped away Thursday. Otherwise, genuinely strong employment growth that seems to force the Fed’s hand could be very bullish after prices first dip… REMINDERS: I WILL BE AWAY FROM THE SCREENS AFTER THE NOON HOUR. AND THIS BEING A HOLIDAY WEEKEND, THERE IS NO SATURDAY REVIEW. WE WILL  HAVE AN EARLY AND EXPANDED MARKET WRAP...

First Trade…
[Click here to view the Bias parameters] There is no preliminary indication ahead of Employment Situation reports.

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)

REMINDER: I am away from the screens today after 2:00 pm ET, and tomorrow after noon.

Through the prior close…
Wednesday’s noon hour test of 2160.00 support produced an obligatory bounce. Like late-Friday’s bounce from testing 2160.00, strong-handed sellers never regained control intraday. Once again, the bounce’s 2170.75-2171.50 target area was fulfilled. Buyers did not gain traction for the effort, but sellers missed the opportunity for breaking support on Wednesday before a three-day holiday. “Unfinished business below” was left outstanding at 2156.50.

Overnight action’s new info…
The consequence of Wednesday’s missed opportunity seems already to be developing. Rallying ahead of Europe’s opens then surged to test 2177.00. Its reaction down touched 2171.50 and has tried bouncing again.

If, then…
Gapping down under Wednesday afternoon’s last relative low of 2163.50 would have started to reject the recovery attempt. Today’s econ calendar is one of the busiest ever, with plenty of influential catalysts. That’s not currently indicated, although formidable at resistance 2177.00 is intact. But having failed to gain traction yesterday afternoon, gapping up above yesterday’s highs is the only credible start to extending higher this morning.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2177.00 would be likely to trigger the 2173.00 bias-up signal at 10:15. Exiting the open under 2170.75 would be unlikely to trigger bias-up.