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…
Sunday night’s rally hadn’t skipped a beat since Thursday’s pre-Easter weekend close, extending the intraday rally to attack 2040.00. That was retraced entirely before Monday’s open, which the morning extended back down to 2022.00, retracing 61.8% of the rally from Thursday morning’s 2012.00 low. No relevant supports were broken, but sellers weren’t trapped. Bouncing to 2034.00 during the afternoon’s no-bias environment was retraced to 2027.00, closing back under Thursday’s highs.

Overnight action’s new info…
Relatively narrow choppy ranging back to 2033.50 suddenly launched a drop down to 2023.50. It might be in reaction to a plane hijacking, which it being reported as a domestic dispute. RSIs diverged into the low, but the drop seems pretty slow retracing since learning the hijacking is confined.

If, then…
With no unfinished business above, the open has little excuse to further delay resuming the pullback begun off of last week’s highs. A “session-long decline” setup isn’t possible, but gapping down under yesterday morning’s lows would likely set a bearish tone for the day. By the same token, threatening to gap down, but avoiding it anyway, should at least retest Sunday night’s high.

First Trade…
Exiting the open at 9:45 above 2027.00 would be unlikely to trigger the 2024.50 bias-down signal at 10:15. Exiting the open under 2022.00 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…
Thursday’s slide had broken the back of a choppy three-day range, retracing back down to the original 2025.25 Belgium-reaction low. Extending down relentlessly overnight had greeted Friday’s open at 2015.00. The open attacked 2012.00 and then reversed the trend back up. All of the overnight drop was retraced back to 2030.00.

Overnight action’s new info…
Sunday night’s open remained well above Friday’s 2027.00 cash session close, and soon extended Friday’s recovery up to 2035.50. Surging at Europe’s opens soon attacked 2040.00. That has been retraced back down to 2033.00, still in positive territory, testing a 61.8% retracement of the overnight rally.

If, then…
If Friday’s low-volume, pre-holiday weekend rally was sponsored by weak hands, then its entire leg should be retraced. Friday’s gap down should be retraced eventually back to its open. No “unfinished business above” remains outstanding to justify delaying the decline’s resumption. So, delaying the decline’s resumption much past the open would suggest the decline won’t resume this morning.

First Trade…
Exiting the open at 9:45 above 2031.00 would be likely to trigger the 2028.25 bias-up signal at 10:15. Exiting the open under 2025.25 would be unlikely to trigger bias-up. Exiting the open above 2037.50 would be likely also to exceed the 2035.25 bias-up target at 10:15 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…
Wednesday’s 5-6 point gap down to 2036.50 extended down through the morning to test 2029.00. Bouncing to within 2-3 ticks of 2036.50 said its goodbyes, and then slid to 2025.00 before the close. A late bounce stopped 2-3 ticks of 2030.75, whose recovery could have invalidated the breakout.

Overnight action’s new info…
The slide resumed without delay, and has extended down without relent. Eventually ranging around this morning’s 2019.25 bias-down target has touched 2017.50.

If, then…
Two days ago I listed the reasons why a downturn had become overwhelmingly likely. I included the warning that not quickly exploiting the list would become likelier to resume the rally. Last night’s slide suggests that window may be closed. But now two new factors might inhibit the ‘s near-term momentum. First is the 2017.00-2020.00 overnight lows, which we had discussed already as natural support. The “lower prior highs” could interrupt the likelier 2009.00 objective. Second is the overnight slide’s relentlessness, a setup which always is vulnerable to inverting at the open. Put all of this into the context of being hours away from a 3-day holiday weekend. and at least we can give more credibility to any opening trending.

First Trade…
Exiting the open at 9:45 under 2017.00 would be unlikely to recover the 2019.25 bias-down target through 10:15, which would renew the bias-down signal. Exiting the open above 2028.50 would be unlikely to trigger the 2025.25 bias-down signal at all.

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 afternoon’s action was essentially the inverse of the morning’s attempt to break lower from the two-day range. Recovering and reversing probe under the range which had been triggered by the Brussels terrorists attacks, had extended through the range’s upper-end. But that was retraced and extended back into the range. The afternoon’s high had fulfilled an objective created by the morning’s dip, and the closing dip had fulfilled an objective created by the afternoon’s recovery. No traction was gained and no unfinished business was left outstanding.

Overnight action’s new info…
Actually, the late dip had only essentially fulfilled its objective to within 2 ticks — and its minimum objective, at that. Never mind, the actual 2037.75 objective was touched at the overnight low. But like the intraday recovery to fresh highs, new buyers haven’t been attracted, as price action ranges sideways.

If, then…
That which doesn’t kill the market, puts it on life support? The market is at risk of a downturn for a host of reasons, many of which I elaborated on yesterday here.  One of those reasons is on display overnight in the inability to attract buyers. Sellers have yet to exploit their opposition’s weakness, and in their own hesitation is essentially the only bullish argument — nature abhors a vacuum, and if sellers aren’t attracted to the situation soon, then buyers will be sucked into producing another upside surge.

First Trade…
Exiting the open at 9:45 above 2048.25 would be likely to trigger the 2045.50 bias-up signal at 10:15. Exiting the open under 2037.75 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…
Sunday night’s initial dip to 2031.00 had recovered by surging to a fresh high at 2044.25. A pre-open dip’s recovery was stopped short at the 2041.50 bias-up signal’ resistance. Its reaction down stopped several ticks short of fulfilling an offsetting test of the 2030.75 bias-down signal before recovering back up to the pre-open high at 2044.50. The higher close fulfilled the minimum requirement of Friday’s new trend high close. “Unfinished business below” was left outstanding at the morning’s 2030.75 bias-down signal.

Overnight action’s new info…
Ranging back up to the highs at 2044.75 had been corrected once down to 2038.25. Or, was its reaction up to 2042.75 a correction of the drop to 2038.25? We may never know, or we won’t know for awhile, as the tragedy of terrorist attacks in Belgium triggered a plunge to within 1 tick of what is this morning’s 2028.50 bias-down target. Its reaction up to 2040.25 was retraced, and a couple more reactions have narrowed around what is this morning’s 2035.75 bias-down signal.

If, then…
Three important points about yesterday’s close. First, it left no “unfinished business above.” All setups requiring an eventual higher close had been satisfied — interestingly, without delay that could have refueled the rally. Second, the choppy, two-day sideways range at trend highs, reflected no shortage of opinion, and also reflected no sponsorship gaining traction for expressing it. Third is the attraction to “unfinished business below.” The combination makes the market vulnerable to a drop, perhaps also to reversing down, but does not predict either. In fact, a durable top would tend to try rallying intraday out of the two-day range before failing. So, it will be very informative whether the reaction to last night’s terrorist attacks is absorbed by recovering its overnight probe lower, as have the two prior night’s dips. The bullish version of a drop would begin by gapping down to create new “unfinished business above” as an anchor requiring an eventual retest.

First Trade…
Exiting the open at 9:45 above 2039.00 would be unlikely to trigger the 2035.75 bias-down signal at 10:15. Exiting the open under 2032.50 would be likely to trigger bias-down.