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…
Friday’s open immediately resumed Thursday afternoon’s rally. The 2090.00 open extended to 2095.50 by noon. Yellen’s comments produced the negative knee-jerk reaction and its retest that was expected to launch a recovery. The 6-point pullback to the opening print had stretched the rubber band to launch an 8-point rally through the close. All but 1 tick of the potential to 2097.00-2098.00 was fulfilled.

Overnight action’s new info…
Friday afternoon’s rally resumed immediately Sunday night, trending up to 2103.75 by midnight. Drifting to as low as 2099.50 never got any more volatile before the holiday’s Globex close. But Monday night’s Globex session extended the pullback to 2098.00 and then more recently to 2096.00. Its reaction up is probing back above Friday’s late highs.

If, then…
Complexity during Sunday night’s probe of fresh highs created a “new Globex trend extreme” that requires intraday retest, often the same day. It touched the six-week old 2101.00-2102.00 Apr 19 pivotal high, which tends to require extending to test the 2108.00-2109.00 Apr 20 actual high. Resuming the rally this morning might not be necessary for keeping intact the relatively steep trajectory that has been expected for this leg. But any pullback should be confined to the morning’s bias environment to avoid signaling a deeper detour.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2098.00 would be unlikely to trigger the 2101.00 bias-up signal at 10:15. Exiting the open above 2103.00 would be likely to trigger bias-up. Exiting the open under 2093.00 would be likely to trigger the 2091.25 bias-down 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 two no-bias environments reflect the session’s limited range, but not its relevance. Opening slightly higher at 2091.75, but still under Wednesday’s highs, the morning trended back down to probe under Wednesday’s lows to 2084.25. The afternoon gradually, choppily trended back up into positive territory, still under the morning’s highs. Traction may have been gained, barely, by exiting the bias environment 2-3 ticks above the noon hour’s highs and trending up by 2-3 ticks to fresh afternoon highs through the 3:10-3:20 window.

Overnight action’s new info…
Immediately extending higher touched 2092.50. Trending back down greeted Europe’s opens at 2088.00 session lows. The open’s 2092.50 high was soon recovered, and is being retested now.

If, then…
If the rally gained traction Thursday, it wasn’t decisive, and it hasn’t yet been rewarded. That could be the most bullish feature of all, if that is actually patience or restrained optimism. Narrow overnight ranges often resolve aggressively at the intraday open, which would likely be up. The only “unfinished business” is above at 2094.75, and an eventual third higher close to fulfill Tuesday’s confirmed breakout, all within the context of resuming a steep recovery leg. This being Friday — ahead of a three-day weekend, no less — “Friday Factors” can interfere and invert those influences, or leverage them.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2094.75 would be likely to trigger the 2092.75 bias-up signal at 10:15. Exiting the open under 2087.50 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…
A sudden reaction down reversed Wednesday afternoon’s required retest of the morning’s overbought RSIs at 2092.00. Despite being late-afternoon and attacking the 2086.00 prior low, the plunge was retraced entirely to 2092.50. It reacted down just as sharply into the close. But the close was well into positive territory, confirming Tuesday’s breakout. The afternoon’s 2084.75 bias-up target remained unfinished business.

Overnight action’s new info…
Wednesday’s last sharp reversal down extended lower overnight to 2082.50. Firming long before Europe’s opens has extended back up to 2091.00, which is being retested after an interim dip to 2085.25.

If, then…
Having entrenched itself, the rally can afford to hesitate again with another pullback. Like the overnight dip, it’s likely to be shallow and brief, so that the ongoing recovery can maintain a steep slope. A little deeper into the mid-to-low 2070‘s would still be effective. Regardless, a correction isn’t required, but likely if the open isn’t already rallying.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2087.50 would be unlikely to trigger the 2092.75 bias-up signal at 10:15. Exiting the open above 2095.00 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 “session-long rally” setup succeeded at producing each of its required elements, i.e. all but one timing window probed its prior timing window’s high. Gapping up above prior highs offered a highly-reliable early entry to capture almost all of the first hour’s 15-point first hour surge, which fulfilled the 2068.00 objective and touched its room for noise up to 2072.00. The next higher objective at 2080.50 was barely attacked to 2077.25, which reacted down 5 points into the close. But the one timing window not probing higher was the afternoon bias environment, which prevented the rally from gaining traction for its effort.

Overnight action’s new info…
The rally resumed with little delay, attacking the 2080.50 objective, which is this morning’s bias-up signal. Surging to 2084.50 reacted down into Europe’s opens and consolidated at 2078.50. The rally resumed and extended to fresh highs within 1 tick of this morning’s 2085.75 bias-up target, now reacting down to 2082.50.

If, then…
So, is this time different? The past three weeks began with failed recovery attempts. Tuesday’s was no less convincing, rallying steeply throughout the day to test resistance. Tuesday’s attempt is offering something new — extending higher overnight. This was expected, as follow-through is normal following a session-long rally. More so, it maintains a steep slope, which we’ve long expected to characterize a valid recovery. It’s now threatening to invalidate the widely watched Head & Shoulders pattern, which I’ve noted wasn’t valid. And after the Friday-Monday hibernation, the wide intraday ranging appears to be back on-track.
      [So sorry for the length this morning, but there’s a lot…]
What if this time isn’t different? Gapping up is the only credible start to a durable rally, since Tuesday’s rally didn’t gain traction for its efforts. But trending up overnight can invert to trending back down from the open, if the open were to hold a test of relevant resistance. Otherwise, Tuesdays breakout is in position to be confirmed by a second consecutive higher close. That would require at least one more higher close, and probably extend to new highs.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2076.00 would be unlikely to trigger the 2080.50 bias-up signal at 10:15. Exiting the open above 2082.00 would be likely to trigger bias-up. Exiting the open above 2088.00 would be likely also to exceed the 2085.75 bias-up target at 10:15 to renew the bias-up signal, next targeting 2091.50.

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 “inside day” had a lot of swings like its overnight action. But its range was narrower, not testing either bias signal intraday. And it barely avoided ending unchanged except for a late break down to 2044.00. Still, two dry cleaners windows — both the morning and afternoon bias environments — make that late break dubious, despite it extending to a fresh session extreme before coming to within 3 minutes of the cash session close.

Overnight action’s new info…
Another wide-ranging overnight session… second time’s a charm? Monday’s late break immediately began bouncing, until a couple of tests of 2047.50 launched a new downleg. It stopped 2 points short of its potential to 2039.50 of the false break that I described yesterday. But price action has otherwise tracked the pattern perfectly, launching a rally at Europe’s opens which has extended up to 2053.00.

If, then…
The next element of the recovery setup we discussed yesterday is to gap up above Monday’s 2054.00-2056.00 highs. Quickly probing them would be credible, too. Just beware the risk of yesterday’s two dry cleaners windows being followed by a third. Avoiding that paralysis could produce a session-long rally today. Last night’s reversal may be different from Sunday night in one important way, by not greeting the open unchanged, at a starting stop.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2054.00 would be likely to trigger the 2053.25 bias-up signal at 10:15. Exiting the open under 2050.50would be less likely to trigger bias-up.