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…
Probing a new “Globex trend extreme” Sunday night wasn’t maintained into Monday’s open. Opening back under Friday’s 2067.00 high began trending down, printing a fresh low in each timing window except the noon hour. We were prepared for the likelihood of beginning a correction immediately, but the intraday drop never became painful enough to seem complete — two no-bias environment and sellers didn’t gain traction. Meanwhile, previously “unfinished business below” remained outstanding.

Overnight action’s new info…
Monday’s downtrending resumed without delay into the Globex open. Friday morning’s 2048.75 bias-down signal’s required retest was fulfilled by midnight, and held the lower-end of a shallow consolidation. Breaking sharply lower into Europe’s opens has extended down to test last Friday’s opening bar down to 2037.75.

If, then…
So, does this overnight decline qualify as a correction’s painfulness? Sort of. The global crowd is feeling it, but we don’t yet know whether it will bleed into the intraday. Gapping open TO a prior extreme after trending relentlessly overnight can often launch a reversal — that’s what happened at this level last Friday. Nothing precludes this morning from duplicating a recovery from gapping down to support. But the alternative is to trend down under Friday’s low, probably a lot.

First Trade…
Exiting the open at 9:45 back above 2044.50 would be likely at least to test the 2048.75 bias-down target as resistance. Exiting the open above 2051.00 would be likely to recover the bias-down target through 10:15 to avoid renewing the bias-down signal at 10:15. Exiting the open under 2039.25 probably trends down sharply.

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…
Trending down Thursday night had produced a third downleg since Wednesday’s top, while fulfilling the likely 2039.25 pullback objective in reaction to the pre-open Employment Situation report. A couple of post-open dips through Friday’s opening 15 minutes of volatility touched 2034.25 but failed to resume the decline. A bottom was obvious when 2039.25 was recovered after two econ reports had exceeded expectations. Expectations for a morning-long substantial rally tested 2057.25. The afternoon extended until touching 2067.00. Buyers gained traction for the effort by exiting the bias environment at 2:30 above the noon hour’s range, and then entering the final hour above the bias environment’s range. “Unfinished business below” was left outstanding at 2048.75.

Overnight action’s new info…
Immediately dipping to 2061.00 was gradually recovered to momentarily probe a fresh high at 2068.00. Reacting back down to attack the 2061.00 was recovered to fresh highs, extending to 2071.50.

If, then…
Friday’s new high close all but requires an eventual higher close before a durable decline would be credible. That does not prevent a temporary decline. The 2067.00-2068.00 area would have been last Wednesday’s next higher objective, had the morning’s rally extended into another timing window. Now that objective is being me, and its attraction above neutralized. Regardless of how high it might be probed this morning, holding its test as resistance would likely launch a correction back down to the 2048.75 unfinished business below, if not also to 2041.00. The alternative to exploiting this pullback opportunity would instead likely extend the rally at a steep slope until probing last year’s 2096.00-2098.00 highs.

First Trade…
Exiting the open at 9:45 under 2065.00 would be unlikely to trigger the 2068.25 bias-up signal at 10:15. Exiting the open at 10:15 above 2071.25 would be likely to trigger the 2068.25 bias-up signal at 10:15. Exiting the open above 2075.25 would be likely also to exceed the 2072.75 bias-up target 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…
Eking higher through the morning had attacked 2060.00 when the noon hour began. The next two timing windows were spent sliding to attack overnight lows within 6 ticks at 2048.75. The final hour’s bounce only attacked 2056.00 instead of recovering it, still undermining the rally’s momentum.

Overnight action’s new info…
Choppy ranging eventually touched 2056.00, which was rejected abruptly. Sliding into and out of Europe’s opens reached 2042.25. A 7-point bounce resolved down to momentarily touch 2041.25, quickly settling in to range narrowly around 2044.50.

If, then…
Including last night’s slide, three relatively substantial downlegs have developed since Wednesday morning’s attack on 2065.00. There is a fine line between temporary correction and momentum reversal, especially ahead of a high-profile influential econ report like this morning’s monthly payrolls. The pullback is vulnerable to becoming a trend reversal if not already ended by the open. While 2044.50‘s test would suffice for completing a pullback, it has room for noise down to 2039.25. The next lower objective at 2032.00 could be a last line of defense before reinstating 1980.00. All of which could become moot by a favorable reaction that opens back within yesterday’s range.

First Trade…
No preliminary levels are considered prior to an Employment Situation report.

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…
Gapping up sharply Wednesday to 2058.00 was extended higher to 2064.50 during the morning’s bias environment. Reversing to fresh session lows attacked 2051.00 during the afternoon’s bias environment. A lot of selling pressure was expended without it triggering bias-down or leaving positive territory. The final hour’s bounce to 2060.50 released a lot of pent-up buying pressure, and the close drifted back down.

Overnight action’s new info…
Wednesday’s closing drift extended through the overnight Globex open, eventually probing under Wednesday’s low down to 2050.25. A temporary bounce to 2054.50 resolved down to fresh lows at 2047.25, and its reaction up has returned to 2054.50.

If, then…
Having probed under yesterday’s lows a couple of times overnight, exiting the open within yesterday’s range could establish a floor for the day. Attacking yesterday’s highs would be likely, if not also probing fresh highs intraday. Resuming the rally through yesterday’s highs would not. Otherwise, backing-and-filling ahead of tomorrow’s Employment Situation report remains likelier, probing deeper under the overnight lows.

First Trade…
Exiting the open at 9:45 above 2054.25 would be unlikely to trigger the 2051.00 bias-down signal at 10:15. Exiting the open under 2049.50 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…
Tuesday’s opening 15 minutes of volatility elapsed entirely under Monday’s 2022.00-2023.00 lows. That’s an unstable base to launch a rally, and the bias environment exit didn’t recover the 2027.00 prior high. Yellen’s dovish remarks nevertheless triggered a surge back to Sunday night’s 2039.75 high. And that extended back to last week’s 2047.50 high.

Overnight action’s new info…
Extending even higher soon tested the next higher objective at 2051.00. A pullback to 2047.50 had been recovered into Europe’s opens, extending quickly up to 2058.25. Consolidating there for a couple of hours then broke higher again, testing 2061.50 before reacting down 3 points.

If, then…
The whole point to last week’s pullback was to correct the rally — specifically, its break above February’s highs — before resuming the rally to probe last year’s highs. The correction’s minimum objective was barely attacked to within 3 points Thursday at 2012.25. Its likelier objective at 1980.00 wasn’t even threatened. Yet, already new highs are printing for this year. That impatience left behind yesterday’s opening dip without actually absorbing or rejecting it, let alone retesting Thursday’s opening gap. Regardless of the sudden recovery’s degree, it’s still fresh, and still vulnerable. Its next higher objectives at 2051.00 and 2056.00 are also this morning’s bias-up signal and target, and their renewed bias-up target at 2061.25 is being tested. After expending a lot of impatient buying pressure overnight, what little traction was gained by yesterday afternoon’s buyers is at risk of inverting down. If 2061.25‘s test isn’t the start of this leg’s end, then doubly-renewing the bias-up would target 2067.00-2068.00.

First Trade…
Exiting the open at 9:45 under 2054.00 would be unlikely also to exceed the 2056.00 bias-up target or to renew the bias-up signal. Exiting the open above 2059.25 would be likely to renew the bias-up.