The First Trade

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK <<==click here
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Thursday’s open recovered a dip that attacked 1840.00 to probe fresh highs testing 1883.00 into the noon hour. Reacting down throughout the bias environment held unchanged levels at 1852.00. The balance of the session firmed to test Wednesday’s 1869.00 high by several ticks.

Overnight action’s new info…
Extending Thursday’s late-afternoon 1855.00-1870.00 range ended before midnight, replaced by a rally back to and through Thursday’s highs to 1892.00.

If, then…
There is significant resistance at 1892.00. Its first test as support had launched a bounce that delayed the decline, and its first test as resistance had reacted down to resume the decline to new lows. It is also the 261.8% projection of a Complex Triangle that had formed during last night’s initial ranging. Exiting the open above it can successfully overcome both elements of its resistance, and allow trending higher intraday. Maintaining a gap up would also overcome that yesterday’s rally gained no traction. Otherwise, even if gapping up, not trending sufficiently higher through the open would be vulnerable to trend back down. Either way, being a Friday, the morning’s bias is likely to persist into the afternoon. The weekend’s impending illiquidity has a way of exacerbating trending.

First Trade…
Exiting the open at 9:45 above 1890.00 would be unlikely to reverse the overnight rally. Exiting the open under 1883.50 would become likely at least to test the 1875.00 bias-up target as support.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK <<==click here
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Wednesday’s record-challenging gap down and extension to new lows had lost sponsorship at the 1804.25 noon hour low. The window had isolated a retest of the 1815.00 October 2014 “V” bottom. The balance of the afternoon rallied sharply to probe Friday and Tuesday’s “higher prior lows” up to 1869.25. The last half-hour settled back down to 1849.00, but the rally had already gained traction for its effort.

Overnight action’s new info…
The recovery immediately resumed and eventually extended to a fresh high at 1876.00, filling the gap back to Tuesday’s close. It was retraced entirely by midnight, on the way down to 1836.25 ahead of Europe’s opens. Choppy ranging since then has been narrowing around 1846.00.

If, then…
Durable bottom? No. Trading bottom? Possibly. Invulnerable bottom? No. DeMark is calling yesterday’s selling intensity on par with the starts of 5-8% corrective bounces. Fair enough, but I would add 2-1/2 points: First, that it’s not a straight-line there, and second, Wednesday afternoon’s bounce already covered 2/3rds of the 5% objective. A corollary to those points is that correcting so much so quickly — during the same session as the alleged low — actually undermines the low instead of reinforcing it. In fact, half of yesterday’s recovery is already retraced overnight. Don’t forget that my active templates suggested that a capitulation was likely to span multiple sessions, which is not yet the case. Rising enough early enough would allow extending the bounce to reward the recovery for traction its gained. But fresh lows pre-open won’t have much time to recover before that traction finds itself inverting, and new lows are in-play.

First Trade…
Exiting the open at 9:45 under 1843.25 would be likely to trigger the 1846.00 bias-down signal at 10:15. Exiting the open under 1833.00 would be unlikely to recover the 1840.00 bias-down target in time to avoid renewing the bias-down signal, next targeting 1829.25. Exiting the open above 1853.25 would be unlikely to trigger bias-down.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK <<==click here
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Yet another gap up Tuesday once again returned all post-open gains, once again reversed into negative territory, and once again failed to recover through the close. The attempt to reject Selling from the 1907.50 overnight high persisted to exit the afternoon’s bias environment under 1865.00-1868.00, attacking 1856.00. Bouncing into the final hour extended up to 1882.00.

Overnight action’s new info…
China’s open immediately triggered a drop back toward Tuesday’s low. Sliding through it to 1851.00 extended to 1838.00 and eventually 1829.25. That’s down 40-43 points from Tuesday’s cash session and futures closes and finally touches August’s 1831.00 overnight low. A bounce to 1843.00 has been consolidating.

If, then…
Gaining traction yesterday would have allowed the decline to resume today despite an opening bounce. NOT gaining traction required extending the decline only by gapping down. The open is indicated to gap down. And this, immediately after the overdue Up/Down-Crash setup rejected yesterday’s up-crash opportunity. Capitulation, at last? Well, a hallmark of this three-week decline has been self-preservation, repeatedly attracting bullish bottom-fishers that continually refuel sellers. We’ll monitor for a Wreversal Wednesday that once again interferes with ripping off the band-aid, extending the pain. Capitulation, but not necessarily “at last.”

First Trade…
Exiting the open at 9:45 above 1840.00 and 1846.00 would be increasingly likely to probe back into yesterday’s range up to 1863.00-1865.00. Exiting the open under 1834.25 would maintain momentum toward the next lower objective at October 2014’s 1813.00 low.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK <<==click here
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Friday’s expiration session had gapped down and tried recovering, but was resisted by 1881.00. Extending back down into the noon hour tested 1850.00 as support. The balance of the session rallied back up to the morning’s highs.

Overnight action’s new info…
Sunday night’s gap down and slide to 1860.00 was recovered into Monday morning, probing Friday’s highs up to 1890.00. Monday night’s dip back down to 1868.00 was recovered back up to and through Monday’s highs , most recently touching 1907.50.

If, then…
Just recovering 1881.00-1885.00 and 1892.00 would have suggested a corrective rally was underway. But already trending well above those levels only raises the standard. Filling the gap back up to Thursday’s ~1914.00 close should maintain its probe above 1912.00 “higher prior lows” to extend higher. Otherwise, post-open action would have plenty of room to trend back down through the morning — potentially back to 1881.00-1885.00.

First Trade…
Exiting the open at 9:45 back under 1899.25.00 would be likely to spend the morning backing-and-filling to as low as 1881.00-1885.00. Exiting the open above 1916.00 could double he overnight rally, adding 25 or 40 points more.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK <<==click here
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
An amazing day. Thursday began by plunging 24 points from its pre-open high to new lows at 1871.00. Being early enough to attract counter-trend sponsorship, a reaction bounced back above prior lows. And then higher. A lot higher. The afternoon’s bias-up signal target was exceeded to test 1927.25, with time for reacting down to 1911.00 through the close.

Overnight action’s new info…
Thursday’s closing dip extended down overnight. A lot lower, attacking 1876.00, which is 5 points within yesterday’s low. And that’s a 105-point round-trip in 20 hours.

If, then…
In a week of least likelihoods, NOT already retracing all of yesterday’s recovery would be surprising. Sarcasm aside, we first began discussing Wednesday morning the potential for a pattern of least likely paths, when Tuesday afternoon’s rally was retraced despite holding up through the open. Bouncing yesterday morning wasn’t unlikely, but testing both bias targets is rare, and trending the afternoon prior to expiration is a least likelihood, too. Expiration is no doubt a catalyst. It is a wild card, less about likelihoods and more about vulnerabilities. Where three-day holiday weekends often inhibit trending or else isolate it to the morning, trending into the close becomes a very real possibility. As with yesterday, the difference should be defined by whether the open is above 1881.00-1885.00, or below it.

First Trade…
Exiting the open at 9:45 under 1881.00-1885.00 would be likely to trend down through the morning, next targeting 1856.00. Exiting the open above 1992.00 would be likely to trend back up.