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 quadruple witch expiration barely gapped up to Thursday’s highs, barely probed Thursday’s highs, and barely held onto Thursday’s highs. But Thursday’s highs weren’t rejected. That defined the balance of the session, which ranged choppily at or above Thursday’s highs. The noon hour’s reaction down from fresh highs was recovered during the afternoon’s bullish WedEX, and the new trend high close on a Friday further entrenched the rally. But buyers gained no traction for the effort.

Overnight action’s new info…
Sunday night’s open was at the 2036.50-2037.50 low of Friday’s post-close dip. Soon, sliding had extended under Friday’s lows to withing 1 tick of this morning’s 2030.75 bias-down signal’s support. Bouncing into Europe’s opens was retraced to retest the low, forming a bottom. A very influential bottom, which launched a steep two-hour rally that probed Friday’s high up to 2044.25. That has reacted down to test the opening range as support 2037.25.

If, then…
Friday left us with a lot of moving parts. They all seem to be moving higher. At least, for Monday morning, with the bullish WedEX likely to influence price action aggressively. The overnight reversal from its initial weakness does suggest what to expect post-open, so long as the reversal isn’t rejected. Similarly, already largely retracing the large recovery suggests that a post-open rally can fade into the noon hour, assuming that it does develop. While the new trend high close on Friday did entrench the rally for at least another new trend high close, it does not require that higher close to be produced today.

First Trade…
Exiting the open at 9:45 above 2043.00 would be likely to trigger the 2041.00 bias-up signal at 10:15. Exiting the open under 2039.00 would be unlikely to trigger bias-up.

SPECIAL NOTE: Wednesday’s bandwidth issue has returned — in a BIG way. It was resolved before our Market Tour last week. I’m not confident about this morning (upload speed has ranged sporadically from a respectable 4.95 down to a horrific 0.10). We’ll test it shortly before the Tour, and might switch to an alternative, which still wouldn’t be optimal.

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 weaker open wasn’t absorbed immediately, requiring a 7-point post-open dip to 2012.00 before proving sellers were losing control. The market caught on to that fact quickly, trending up relentlessly through the afternoon’s bias environment exit to attack 2037.00. Backing-and-filling down to 2031.00-2031.00 left outstanding overbought RSIs remained at the high, and buyers gained no traction for the effort. But Wednesday’s breakout was confirmed.

Overnight action’s new info…
Thursday’s late backing-and-filling was retracing the afternoon’s no-bias trending that had originated from 2027.00 and 2028.50. Ranging choppily down finally touched 2027.00 after firming to 2034.00 through Europe’s opens. The lower low has been more productive, reacting already back to yesterday’s 2036.75 high, neutralizing its attraction above.

If, then…
Extending the rally this morning is unlikely without gapping up. Having the same limitation barely slowed Thursday’s rally and didn’t prevent it retaining the day’s gains. Trading flat-to-lower this morning wouldn’t prevent the afternoon from being influenced by the bullish WedEX, which only signals an upward bias. Triggering bias-down would threaten to invert WedEX to bearish if its target became “unfinished business.”

First Trade…
Exiting the open at 9:45 above 2028.50 would be unlikely to trigger the 2027.00bias-down signal at 10:15. Exiting the open above 2036.75 would be likely to trigger the 2034.50 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)

PLEASE NOTE: I’ve been trying to resolve bandwidth issues that began overnight, so please accept my apologies if chaRTroom and recordings are not clear. Thank you.

Through the prior close…
Wednesday’s FOMC statement was greeted soon after a noon hour sell signal’s sell signal under 2006.00 had met its 2001.50 target. The satisfied selling pressure cleared the path to a bullish reaction that tested targets at 2018.25 and 2022.25. A last-minute sell signal triggered under 2019.00 and its 2016.00 target was met at the close. WedEX triggered an active bullish signal. The session was a breakout, being the first fresh high close above a multi-session range. However, buyers did not gain traction for their efforts.

Overnight action’s new info…
Fresh highs were soon probed up to 2026.00. A pullback to 2019.00 was recovered to 2026.75 into Europe’s opens. Consolidating there eventually resolved down. And down. Way down, testing 2006.00 as support. Its reaction is currently testing 2012.00. The overnight high is a “new Globex trend extreme.”

If, then…
Gapping up is the only credible path to immediately resuming the rally. That seems unlikely, given the overnight slide’s recent momentum. The requirement to retest the overnight high’s “new Globex trend extreme” might help attract price higher intraday, but not necessarily at the open. Leaving the upside attraction outstanding would help WedEX produce its bullish bias Friday afternoon. If not for the new Globex trend extreme, gapping down under 2006.00 would have suggested yesterday’s high was an anomaly. Gapping down under 2006.00 would still be more vulnerable to extending down this morning. But invalidating or even inverting yesterday’s bullish signals will require rejecting all of yesterday afternoon’s rally, back through its 2000.00-2001.50 origin.

First Trade…
Exiting the open at 9:45 under 2006.00 would be likely to trigger the 2008.00 bias-down signal at 10:15. Exiting the open under 1999.50 would be likely also to exceed the 2001.50 bias-down target and renew the bias-down signal. Exiting the open above 2012.00 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…
Tuesday’s open gapped down to attack Friday’s 1996.00 lows, which held. But it wasn’t much of a test, so the rubber band wasn’t stretched enough for a snap back up. But the balance of the session did trend up to 2007.00, retracing 61.8% of the gap down. All but one timing window printing a higher high.

Overnight action’s new info…
The reward for holding a test of Friday’s low was to fill the gap back to Monday’s 2009.50 close, if not also to probe Monday’s 2015.00 high. Tuesday’s rally extended to 2009.50, where a surge attacked 2012.00. Reactions down under 2006.00 recovered to retest 2009.50, which have reacted down again to 2006.00.

If, then…
Holding a 61.8% retracement is often “equilibrium.” Trending attempts are likely in one direction, and then in the other, each being very convincing before reversing again. Late-afternoon tends to allow a more successful attempt. That template happens to align well with this afternoon’s FOMC events, with the policy statement being followed by Yellen’s quarterly Q&A.

First Trade…
Exiting the open at 9:45 above 2012.00 would be likely also to trigger the 2009.50 bias-up signal at 10:15. Exiting the open under 2006.00 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…
Monday’s recovery of Sunday night’s slide had probed fresh highs by a 2-3 point margin. Despite that coming very late, a last-minute dip ended the day 2-3 points into negative territory. No traction was gained by the intraday rally, and Friday’s breakout was not confirmed, two elements of “ineffectual optimism.”

Overnight action’s new info…
Narrow ranging at Monday’s close eventually began sliding. Ranging narrowly again at what is this morning’s 2004.00 bias-down signal eventually broke lower to range around this morning’s 1998.50 bias-down target. Probing its lower-end down to 1996.50 has snapped back up into the range.

If, then…
We began monitoring a topping pattern last Saturday. It defined intraday action until Friday’s overnight rally and gap up to fresh highs. Was Friday an exception, or the new rule? Monday’s session somewhat validated by not rejecting it. But not confirming Friday’s breakout leaves the door open to rejecting it. Of course, the burden of proof is greater for its delay. Yesterday’s ineffectual optimism in S&Ps offers more evidence. An index comparison offers more evidence, in that only the Dow has extended to fresh highs for two consecutive days, while NDX has only now closed above its prior high. S&Ps opening under Friday’s lows (as is indicated overnight) would not be required to fill the gap back to Monday’s high. Last week’s intraday dips only trapped shorts whose squeeze fueled Friday’s breakout. Similarly, absorbing this morning’s gap down would trap more shorts for another squeeze to fuel the rally.

First Trade…
Exiting the open at 9:45 under 1995.00 would be likely also not to recover the 1998.50 bias-down target by 10:15, renewing the bias-down signal. Exiting the open at 9:45 above 2001.50 would be likelier to hold the bias-down target through 10:15, and to avoid renewing bias-down. Exiting the open above 2007.50 would be unlikely to trigger the 2004.00 bias-down signal.