The First Trade

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

CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Rewarding Monday’s rally for having gained traction left the session vulnerable at 2063.50 to at least a pullback. The market seemed eager to process that cycle, already fulfilling the afternoon’s 2050.50 bias-down target within minutes of triggering its 2056.00 signal. In fact, its reaction had bounced to probe back above the bias-up signal, postured to resume the rally once the bias would begin lapsing. But a terrorist plot discovered in Germany injected another downleg to 2046.50 and 2041.50, ending the day back at the morning’s lows.

Overnight action’s new info…
Before the close, a second plot’s discovery had failed to trigger more selling. Firming into the close up to 2050.75 had initially firmed further into the Globex open up to 2052.00. The balance of the night drifted back down to 2043.00, still contained above yesterday afternoon’s lows. Anti-terrorist operations in Paris hasn’t exacerbated the slide. In fact, the reaction to those operations winding down is surging back into positive territory and probing fresh overnight highs at 2053.50.

If, then…
There remains potential for extending this stage of the rally to 2068.00 before becoming vulnerable to its next significant correction or trend reversal. A repeat of Friday night’s actions would likely end that upside effort. Meanwhile, a couple of Fed speakers and FOMC Minutes lie ahead.

First Trade…
Exiting the open at 9:45 under 2050.00 would be unlikely to trigger the 2055.00 bias-up signal at 10:15. Exiting the open under 2045.50 would become slightly likelier to at least test the 2040.50 bias-down signal by 10:15.

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

CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Sunday night’s gap down had been recovered into positive territory before Monday’s open, a pre-open dip was recovered to higher highs. The morning’s bias environment contained one last correction, before marginalizing sellers for the balance of the session. The afternoon’s 31-point upleg up to 2051.00 gained traction.

Overnight action’s new info…
Flat-to-higher ranging had dipped into Europe’s opens. But that only launched another upleg to 2059.25. It was preceded by a dip down to 2055.00, and followed by a reaction down to 2055.00. That formed a Head & Shoulders which is now probing lower under 2054.00.

If, then…
A reward is due for gaining traction. That’s usually delivered by the next morning extending the trend. But when last-hour and/or overnight timing windows have already extended the trend, the risk is that fully-rewarded buyers become sellers. And that risk is greeting today’s open. An overnight pullback to 2035.00 would have helped to secure a morning rally. Yesterday afternoon’s 2041.25 renewed bias-up target was being met as the bias environment began lapsing. It was extended 10 more points into the close, and now at least 8 more points overnight to 2059.25. That’s 30 points since yesterday afternoon’s 2029.00 buy signal. None of which is a sell signal, and this upleg still has room to 2068.00. A pre-open pullback could suffice in place of an overnight pullback. Otherwise, not extending higher immediately post-open would be vulnerable to inverting back down.

First Trade…
Exiting the open at 9:45 above 2058.00 would be likely also to exceed the 2055.75 bias-up target at 10:15 to renew the bias-up signal. Exiting the open under 2051.00 would be unlikely to renew bias-up. Exiting the open under 2048.00 would be unlikely to trigger the 2050.00 bias-up signal.

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

CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Gapping down Friday to 2037.00 didn’t hesitate extending down to 2023.00. Consolidating there resolved up into a noon hour bounce back to the 2037.00 open. But that was Friday’s last and only bounce, as the balance of the session trended down, putting into play 2012.00, and potentially 2007.50. The final hour was spent piercing and probing the 2017.00 area.

Overnight action’s new info…
Headlines from Paris crossed in time to trigger another downleg to 2012.00. The weekend’s fuller revelations triggered a gap down Sunday to 2006.50. The opening bar also touched 1998.50, but the balance of the night trended back up. Europe’s opens were greeted  from just under the 2017.00 area, and the reaction extended back into positive territory, up to 2024.50. Ranging back down to 2019.00 has also attacked 2026.00.

If, then…
Crass thought it may be, the market ultimately trades on only earnings and liquidity. Even then, much more so on the latter. The emotional reactions are discounted and the market moves on. That applies equally to Sunday night’s open, as to gapping up too much in reaction. The decline’s 2012.00 target hasn’t been met intraday, but still could be, especially if the open doesn’t recover resistance. Friday morning’s ~2023.00 “higher prior low” is natural resistance, and it is being tested. Opening back under Friday’s 2017.00 last-hour low could extend to retest the overnight low entirely.

First Trade…
Exiting the open at 9:45 above 2029.00 would be likely to trigger the 2027.00 bias-up signal at 10:15. Exiting the open under 2020.25 would be unlikely to trigger bias-up. Exiting the open under 2013.50 would be likely to trigger the 2017.00 bias-down signal.

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

CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Thursday’s gap down to 2057.00 was the center of choppy ranging through the morning’s bias environment. When the window began lapsing, the decline extended. A noon hour bounce back up to 2057.00 was the last bit of optimism, as the balance of the cash session trended down to 2041.00.

Overnight action’s new info…
Actually, the afternoon’s slide was still optimistic, since its likely target was 2039.75. Stopping optimistically short then made the next lower objective likelier. Ranging narrowly sideways overnight between 2040.00-2045.00 seems to have been even more optimism, since a sudden break lower quickly extended down to 2034.00.

If, then…
Meeting the 2034.50 target overnight creates a reversal setup unique to Fridays. Opening back in positive territory could get the best of both worlds — isolating the selling to overnight, while also leveraging the slingshot effect into an opening surge. Regardless of the opening print, not surging through the open would suggest the decline’s momentum remains intact. Then another Friday factor would become influential, as everyone rushes to be first through the exit ahead of weekend illiquidity. A renewed bias-down would essentially target the 2025.00 area.

First Trade…
Exiting the open at 9:45 above 2039.75 would be unlikely to trigger the 2034.50 bias-down signal at 10:15. Exiting the open under 2032.25 would be likely to trigger bias-down.

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

CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Wednesday’s open under 2082.00 was already rejecting the overnight rally to 2087.00. The rejection extended down to 2069.50. Bouncing through the noon hour to 2082.50 essentially duplicated the overnight rally, including its reaction down back to 2069.50.

Overnight action’s new info…
Slightly lower lows tested 2068.00. That didn’t prevent bounces to 2075.00 and 2077.50, and they didn’t prevent dropping to fresh lows attacking 2065.00. Now another bounce is testing positive territory by attacking 2071.00.

If, then…
The overnight volatility is impressive. It continued yesterday’s pattern. Continuing yesterday’s pattern is the basis for suspecting that a fresh post-open low could be retraced, rejected and reversed to launch a new rally leg into the afternoon. So, until disproved by failing to recover from under Monday’s 2062.00 low through a relevant timing window, the pattern remains accumulative. The market doesn’t seem to be pursuing the alternative path higher which is to gap up — but that could change in a couple of hours, as it has changed from just several hours ago.

First Trade…
Exiting the open at 9:45 under 2066.75 would be likely to trigger the 2068.00 bias-down signal at 10:15. Exiting the open above 2072.50 would be unlikely to trigger the 2068.00 bias-down signal. Exiting the open above 2076.00 would be likely to trigger the 2073.75 bias-up signal.