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…
You don’t see that everyday. I’m not referring to Monday’s gap down, or to holding two tests of Friday’s 2079.50 low, which avoided triggering bias-down. But higher targets were invalidated upon exiting the bias environment under the open’s lows. And that was despite fresh post-10:15 highs confirming the higher targets, piercing positive territory up to 2089.25. The balance of the session trended down to 2068.75.

Overnight action’s new info…
Monday’s slide kept its pace and slid to 2064.00. Bouncing back to 2071.75 was already giving way ahead of Europe’s opens. Fresh lows down to 2060.25 are being retraced now up to 2067.25.

If, then…
The decline’s next lower target at 2063.50 was put into play. It has been influential overnight, initially attacking it to within 3 ticks, and then probing it temporarily by 3 points. This action can form an isolation setup if post-open action avoids probing negative territory. No influential econ reports are scheduled, and FOMC’s policy statement isn’t until tomorrow — neither of which is necessarily bullish or bearish, but they could otherwise be catalysts for sparking counter-trend action. Without already reversing up this morning, the decline could extend toward or to 2043.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2070.75 would be unlikely to trigger the 2068.25 bias-down signal at 10:15. Exiting the open under 2064.50 would be likely to trigger bias-down. Exiting the open under 2060.50 would be unlikely to recover the 2062.50 bias-down target at 10:15, which would renew the bias-down signal next targeting 2057.50 and 2053.00.

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 15-point  gap down to 2090.00 didn’t extend down immediately, but eventually it extended down a lot. The mid-morning bounce to 2094.00 was reversed to the afternoon’s 2079.50 low. Too late for counter-trending to gain traction, the final hour bounced to 2088.50, fulfilling the corrective bounce target.

Overnight action’s new info…
Sunday night’s open gapped down to 2081.00. That was extended gradually overnight to probe under Friday’s low down to 2077.00 just ahead of Europe’s opens. It’s support, being is this morning’s bias-down target. Recovering to fresh overnight highs that attacked 2085.00 didn’t prevent reacting down again to 2078.00. But that’s now being retraced to 2083.00.

If, then…
Last night’s path is tracking the template we discussed during Saturday Review as being the most likely for a bullish resolution. Of course, until the open it’s still somewhat similar to the bearish template. First, reacting down Sunday night validated that Friday’s late bounce was only a correction. Also, probing Friday’s low has been defended by a bounce, and its fresh high proves it was not arbitrary. But the bullish template shouldn’t isolate the support test to overnight, which the current bounce is attempting. Not retesting Friday’s low post-open before bouncing and delaying fresh lows intraday would likely only contribute to an afternoon bearish scenario.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2086.75 would be unlikely to trigger the 2082.00 bias-down signal at 10:15. Exiting the open under 2080.50 would be likely 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…
Plus ça change, plus c’est la même chose. Thursday’s gap down deviated from the two prior opens that had gapped up. But it copied their post-open action by trying to rally anyway. “Unfinished business below” at 2097.75 dragged price down into the noon hour. But the balance of the session rallied to pierce the 2107.00-2110.00 resistance that had contained prior highs. To the degree that its 1-tick margin is reliable, the afternoon’s bias-up signal left unfinished business above at 2109.00.

Overnight action’s new info…
That 1-tick margin doesn’t seem reliable, at all. Already dipping a couple of points into Thursday’s close, Globex extended lower to test 2102.00 by midnight. That was the rally’s penultimate objective 2107.00, which had held through Monday and Tuesday’s close. It performed better as resistance than as support, which melted away at Europe’s opens, now attacking 2091.00.

If, then…
Monday’s noon hour reaction to Yellen’s comments had dipped sharply to attack 2091.00. The interim recovery into Wednesday’s high was 20 points higher. Monday was the last morning that had been signaled to rally. Tuesday and Wednesday mornings rallied anyway, dooming themselves to failure, and creating a lower attraction. The attraction was neutralized by Thursday’s warning shot across the bow, which went on to create a higher target. The higher target that has been suspicious since being signaled, now absolutely dubious, when considering last night’s action in the context of what we’ve known all along — that reversing down would unfold quickly if at all. None of which will matter this morning if the open recovers back above yesterday’s close.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 back above 2100.50 would be unlikely to trigger the 2098.50 bias-down signal at 10:15. Exiting the open under 2092.25 would be unlikely to recover the 2093.25 bias-down target by 10:15 which would renew the bias-down signal, next targeting 2086.50.