The First Trade

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

CHARTROOM LINK(s)
o New! Omnistream
o Anymeeting backup
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Thursday gapped down, as had Wednesday. Thursday’s post-open rally peaked sooner than had Wednesday’s. Despite having been higher, it was reversed under the open’s low sooner. Buyers were learning to exit sooner. The afternoon did not recover. Buyers were learning to be patient. But only one traction factor triggered. Buyers still had not been conditioned to become sellers.

Overnight action’s new info…
Firming 5 points out of the Globex open soon surged 25 points into China’s open. It never extended higher. Hovering choppily at the highs — even through Europe’s opens — eventually did retrace all but 3 points of the gain.

If, then…
Last-minute sentiment before influential reports can be predictive from a contrarian perspective. So, did last night’s initial 25-point surge reflect optimism, or was it actually inhibited by pessimism? A little of both. Gapping up enough could trend higher intraday. But the trend is otherwise down, and not reacting up high enough for long enough would be likely to resume the decline.

First Trade…
Preliminary levels aren’t calculated ahead of the Employment Situation report.

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

CHARTROOM LINK(s)
o New! Omnistream
o Anymeeting backup
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Wednesday’s gap down back under Monday’s low to 1977.00 was already recovering from lower lows overnight. The recovery extended through the morning back up to 1995.00 — almost convincingly. Equilibrium reversed the rally down to new lows under 1971.00. Regardless of being convincing, sellers had gained traction. And regardless of the decline gaining traction, the last hour rallied back up to 1984.00.

Overnight action’s new info…
The last-hour’s rally extended hopefully into the Globex open, hesitating at 1991.00 ahead of China’s open. Ahh, China’s open. Its immediate plunge and immediate halt triggered a drop under Wednesday’s lows to 1961.00-1962.00. That 30-point drop eventually doubled down to 1931.00. Three hours later, price has firmed up to 1944.00.

If, then…
Extending yesterday’s initial 40-point decline intraday would have doubled it. Delaying it didn’t prevent it, and delaying it didn’t delay it for very long. Is the drop hurrying itself down to a bottom, or posturing itself to triple itself? Probably the latter — buyers are becoming increasingly conditioned to the new trend, and the weekend’s illiquidity is fast-approaching. The next lower objective is 1912.00 with room for noise down to 1907.00. Rallying first anyway would find resistance at 1954.00-1956.50. I have no active templates at this stage that contain a path to recovery before extending down sharply, presumably for the long-awaited duplication and magnification of August’s plunge. TGInyF (thank goodness it’s not yet Friday).

First Trade…
Exiting the open at 9:45 above 1949.00 would be likely to extend its bounce up to 1954.00-1956.50. Exiting the open at 9:45 under 1937.25 would be likely to resume the decline to fresh lows.

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

CHARTROOM LINK(s)
o New! Omnistream
o backup (launched AFTER the tour)
(pre-open Market Tour begins at 8:55 ET)
* backup is launched AFTER the Tour

Through the prior close…
Opening almost flat Tuesday at 2009.00 was retraced to attack Monday’s late 1994.75 buy signal as support. Bottoming just after noon then began recovering back up to the fresh highs testing 2014.00 as the afternoon range narrowed back to 2009.00.

Overnight action’s new info…
Ranging narrowly just above 2009.00 was shocked by another Yuan devaluation, which triggered a slide under Tuesday’s low to 1986.00. That was well before midnight. Firming back up to 1998.00 was shocked by Europe’s opens, which triggered another slide under Monday’s low to 1975.50. That’s down 36 points from yesterday’s close.

If, then…
Narrowing into yesterday’s close had laid the groundwork for gapping sharply at today’s open. The likely direction was down — not likely enough to short at the close, only likely enough for overnight trending to be credible. The likely direction was down, since buyers had not gained traction for their considerable efforts since Monday’s too-late surge. Narrowing into yesterday’s close also had laid the groundwork for “equilibrium,” which trends convincingly in one direction, and reverses convincingly at least once. But the first reversal becomes unlikely if opening too far from the orbit of Tuesday’s range, which is defined by 1998.00. Meanwhile, the orbit under Monday’s range reaches 1973.75 and 1965.25. Testing and holding either through a relevant timing window would be credible for launching a reversal back up, or at least a substantial effort. Otherwise, breaking under either would more likely lead to doubling the overnight drop intraday.

First Trade…
Exiting the open at 9:45 above 1987.50 would start to suggest at least a bounce to 1998.00. Exiting the open at 9:45 above 1973.75 after touching it would also suggest a bigger bounce underway. Exiting the open under 1984.00 without yet touching 1973.75 would be likely to extend down.

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

CHARTROOM LINK(s)
o New! Omnistream
o backup (launched AFTER the tour)
(pre-open Market Tour begins at 8:55 ET)
* backup is launched AFTER the Tour

Through the prior close…
Yesterday’s last half-hour bore not even a passing resemblance to the rest of the session. The rest of the session was about selling — gapping down 35 points to 2000.00, extending down almost 20 points more to attack 1980.00, retracing a bounce from its 1997.00 peak down to 1984.00. Without any accumulation preceding it, yesterday’s last half-hour surged suddenly, 25 points into and out of the close. A buy signal finally triggered as the surge passed through 1994.75, reaching 2008.00-2010.00 into and out of the close.

Overnight action’s new info…
The late surge followed-through up to 2017.00. It was on the way to being retraced by midnight, and treading water into Europe’s opens. That was the last straw, triggering a slide attacking 1992.00 and then hovering around yesterday’s late 1994.75 buy signal up to 1998.00.

If, then…
2008.00-2010.00 would have been sold if tested initially at yesterday’s open. Testing it at yesterday’s close was similar, especially when originating so late and without prior accumulation. Sliding overnight hasn’t yet confirmed confirm this. The retracement must still reject yesterday’s late 1994.75 buy signal, which is more difficult since it was so productive. Filling the gaps back to yesterday’s 2005.00 and 2009.00 closes can’t yet be dismissed in even the most bearish scenario — similarly, their recovery could be bullish.

First Trade…
Exiting the open at 9:45 under 1989.00 would be unlikely to recover the 1993.50 bias-down target through 10:15, which would renew the bias-down signal. Exiting the open above 2001.50 at 9:45 would be unlikely to trigger the 1999.00 bias-down signal at 10:15.

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

CHARTROOM LINK(s)
o New! Omnistream
o Anymeeting backup
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Friday’s gap down had extended to 2037.00 before bouncing. The bounce touched Thursday’s late lows around 2055.00 before returning to the morning’s lows. The final several minutes plunged to fresh lows attacking 2030.00.

Overnight action’s new info…
Sunday night’s open gapped up and extended higher to 2043.50. That barely attacked Friday’s late-afternoon highs. China began crashing, and even that relatively shallow bounce disappeared. Various countries aligning with either Iran or Saudi Arabia through embassy closings probably hasn’t helped. The balance of the night has been trended down relentlessly, recently touching 1995.00 and then bouncing to 2001.50. That’s basically a 40-point drop.

If, then…
We discussed air pockets Friday morning. The first one under 2030.00 became obvious during last year’s final minutes. The second air pocket under 2029.00 became obvious when China began crashing. The extension from there has leap-frogged several other “lower prior highs” to test one of the last “lower prior highs” remaining. And all of this is retracing in 2-3 days back to two-week old lows. Exiting the weekend with extreme sentiment is often a sentiment extreme. This was the case last weekend, after the morning followed-through shallowly. Exiting this morning’s open already bouncing from its 2-week old prior lows would suggest this leg isn’t extending, either. Otherwise, while the relentlessness might subside, the direction doesn’t have to reverse.

First Trade…
Exiting the open at 9:45 above 2008.00-2010.00 would suggest the overnight decline’s momentum had been absorbed. There is otherwise potential to 1991.00 before putting into play essentially a new leg, perhaps a crash leg greater than August’s.