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…
Thursday afternoon’s slide had extended down overnight to greet Friday’s open gapping down at 2063.00. The morning’s bias environment fell to 2046.00, which the afternoon’s bias environment retested. Their 2057.00 interim bounce was recovered during the last half-hour’s rally back to 2063.00.

Overnight action’s new info…
Sunday night’s weaker Globex open continued ranging flat-to-lower down to 2055.50, back up to 2059.00. Firming into Europe’s opens attacked 2063.00, but only momentarily before reversing aggressively back down to 2057.00. It was recovered almost as aggressively, and now fresh highs are touching 2065.50. That is this morning’s bias-up signal, i.e. resistance.

If, then…
Friday afternoon’s range isn’t likely to withstand a retest as support. It represented a retest of early-April’s consolidation that had launched the last rally leg. And its retest was recovered to close above the consolidation. So, either Monday’s open is already rallying — gapping up and extending — or else the decline is resuming. Overnight action hasn’t been overly-optimistic, but neither has it yet indicated a sizable gap up that would be likely also to extend. Regardless, not indicating a gap down should be bullish, as this stage of the pattern is much less likely to maintain Friday’s range.

First Trade…
Exiting the open at 9:45 above 2067.25 would be likely to trigger the 2065.25 bias-up signal at 10:15. Exiting the open under 2062.00 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…
Thursday morning completely retraced its overnight plunge. The open had already recovered from 2070.25 to 2080.25, and the bias environment began lapsing at its 2093.75 objective. The noon hour’s pullback became something else entirely, triggering the 2088.00 bias-down signal and extending well below its target to 2065.25. Ultimately, 2067.00-2069.00 held as support.

Overnight action’s new info…
Thursday’s closing bounce was extended to its 2075.50 target, and reversed down immediately. That cycle has repeated several times while ranging choppily between 2068.00-2075.00.

If, then…
Gapping up enough to reject yesterday afternoon’s decline seems unlikely now. Hovering optimistically short of touching yesterday’s lows isn’t likely to suddenly launch a durable rally. So, suddenly launching a durable rally would be likely to fail. Recovering from at least a momentarily blip-down to fresh lows would be more credible. Of course, that setup’s first stage would meanwhile risk extending yesterday afternoon’s decline. And that could extend to the 2056.00 area’s “lower prior highs.” Whichever the session intends, it should be obvious early, as Friday morning biases are likely to persist through the noon hour.

First Trade…
Exiting the open at 9:45 under 2064.00 would be likely to trigger the 2066.25 bias-down signal at 10:15. Exiting the open above 2069.00 would be unlikely 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…
Wednesday morning’s choppy ranging in negative territory had dipped 10-12 points down to 2076.25, draining the market of optimism ahead of the afternoon’s FOMC statement. Its knee-jerk reaction down to 2077.50 stopped short of neutralizing oversold RSIs at the low before reversing up above prior highs to 2094.00. The rally gained traction by exiting the bias environment above the noon hour’s high and then trending to fresh highs through the 3:10-3:20 proxy window. A late dip fell to 2088.00.

Overnight action’s new info…
The last-minute dip was gradually recovered entirely, eventually touching 2094.25. The BOJ policy statement took a surprising twist by not increasing asset purchases. The Nikkei crashed 1000 points, while ES plunged 20 points to 2074.00. Bouncing to 2083.00 has resolved down to lower lows at 2070.25.

If, then…
Only the most die-hard Keynesian still truly believes there is an endless supply of stimulus. Unfortunately, those people tend to work for a central bank where they can keep playing that tune. Well, did their music just stop? BOJ’s decision seems truly to be a surprise, less because of the plunge it triggered, and more for coming after yesterday afternoon’s buyers had gained traction. So far, only Monday’s 2071.00 low is being retested, with room below it down to 2067.00-2069.00. Any lower could get ugly, but rallying back above relevant levels by mid-morning would suggest the surprise had been absorbed.

First Trade…
Exiting the open at 9:45 back above 2080.50 would be likely to hold the 2076.00 bias-down target through 10:15. Exiting the open above 2086.25-2087.00 would be unlikely to trigger the 2083.75 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…
The rally’s resumption was a victim of its own success Tuesday. Its own success, and its late sponsorship. Monday afternoon’s rally didn’t surge until the final minutes, the overnight rally never cleared Sunday night’s prior high, and the post-open surge was almost forgotten, then quickly attacked its 2091.75 target. Reacting down under overnight lows was recovered to range choppily sideways up to 2084.00–2085.00 as post-close AAPL earnings inhibited trending.

Overnight action’s new info…
Tuesday’s last-minute spike up to 2089.00 had reacted back down to 2083.75 on AAPL’s earnings miss. The Globex open extended the reaction down to 2081.00. And that was the end of that. As usual, price action was inhibited by the anxiousness, and the news was a non-event. A momentary surge to 2087.00 at Europe’s opens was retraced to range narrowly around 2084.00. That’s the ES. Meanwhile, NQs plummeted 55 points in reaction to AAPL, but also only ranged narrowly sideways overnight.

If, then…
If you can keep your head when all about you are losing theirs… then maybe you haven’t checked your voicemail? (Apologies to Rudyard and Woody.) Yesterday’s ES pattern interrupted the decline’s momentum from last Wednesday, being the first session not to probe the prior day’s low. But essentially maintaining positive territory did not reverse momentum up, and buyers gained no traction for the effort. Absent gapping up this morning to resume the recovery from Monday’s low, another probe of fresh lows becomes likely. So, the ES holding up compared to NQ had better be appreciated soon, because the lack of upside momentum only enables a morning dip. And no influential econ reports are scheduled until this afternoon’s FOMC statement.

First Trade…
Exiting the open at 9:45 under 2078.50 would be likely to trigger the 2081.00 bias-down signal at 10:15. Exiting the open above 2083.75 would be unlikely 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…
Sunday night’s gap up immediately fulfilled the 2091.00 “unfinished business” left outstanding from Friday. Trending down into and out of Monday’s open extended to fresh lows through the morning. Reacting up from a blip-down to the 2071.50 bias-down target launched the afternoon’s recovery, eventually probing fresh session highs up to 2082.00-2083.50. No traction was gained in the session’s “ineffectual pessimism,” and no unfinished business was left outstanding.

Overnight action’s new info…
Creeping higher… Narrow ranging initially maintained Monday’s late 5-point surge. Another sudden surge 5-point attacked 2088.00, but it was soon retraced down to 2081.75. Firming into Europe’s opens soon surged to a fresh high testing 2091.00. Now its reaction down is trying to hold 2085.00.

If, then…
Monday was the third consecutive session since Wednesday’s high to probe under the prior day’s low, with lower highs. Despite the multi-session trend, Monday’s close recovered back above the two prior sessions’ lows. Will the slowing momentum be exploited today? No traction was gained yesterday, so resuming yesterday afternoon’s rally this morning requires gapping up — which is currently indicated. The gap up must also be maintained through the open and preferably also extended. Regardless, the alternative to rallying this morning would be to resume the downtrend from last Wednesday’s high… Afternoon volatility may be inhibited by high-profile earnings due after today’s close from AAPL, EBAY and (to a lesser degree) CMG.

First Trade…
Exiting the open at 9:45 under 2083.50 would be unlikely to trigger the 2086.00 bias-up signal at 10:15. Exiting the open above 2088.00 would be likely to trigger bias-up. Exiting the open above 2093.50 would be likely to renew the bias-up signal.