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…
Tuesday’s gap down was likely to be absorbed and reversed since Monday’s rally had gained traction. The balance of the morning trended back up through Monday’s high to fulfill the reward owed to Monday’s rally. The afternoon’s trended higher still. Its reaction down into the close held the noon hour’s range.

Overnight action’s new info…
Choppy sideways action has avoided negative territory. So far, it has formed an Ascending Triangle. As we discussed during the Wrap, rallying out of the prior two overnight pullbacks had likely conditioned the market not to allow another overnight pullback.

If, then…
Also discussed during the Wrap was the resulting vulnerability of being conditioned to buy impatiently. Tuesday’s high held a relevant target, satisfying a lot of buying pressure. No traction was gained for the rally’s efforts, so no further reward is owed it. New highs are in-play, entrenching the uptrend, which often allows the rally to rest. By the way, a lot of Fed speakers are scheduled today, and they’re probably not going to be whispering sweet nothings into the rally’s ear. Overbought RSIs at Tuesday’s high requiring an eventual retest might help to resume the rally Wednesday morning, but its attraction can be neutralized quickly.

First Trade…
Exiting the open at 9:45 above 2110.25 would be likely also to trigger the 2106.75 bias-up signal at 10:15. Exiting the open under 2101.50 would be unlikely to trigger bias-up.

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…
Monday’s open had recovered a lot already between Friday’s last-minute plunge and Sunday night’s lower lows that met the 2064.50 bias-down target. But opening back above Friday’s 2076.00 last relative low never really looked back on the way to fulfilling expectations for retesting last week’s 2094.75 overnight high. The rally’s gained traction for its effort by exiting the bias environment and entering the final hour trending upward. A reaction down from 2100.00 ended the cash session 1 point above 2094.75, still above the rally’s 2088.00 objective.

Overnight action’s new info…
Reacting down into the cash session close extended down into the futures close. It extended deeper into the Globex open down to 2092.25. Bouncing to 2097.25 was brief, and resolved into a downtrend that is now probing fresh lows at 2090.25, piercing yesterday’s noon hour high as support.

If, then…
Gapping open under 2088.00 could invalidate yesterday’s close above it. That would still leave outstanding the gap back up to yesterday’s close wanting to be filled, but from a position of weakness likely to be reversed back down. Opening above 2088.00 could still reject an intraday recovery, but that would be the rally’s last opportunity to avoid new highs. Meanwhile, traction gained for yesterday’s effort wasn’t rewarded overnight, making a morning rally likely, or else an afternoon rally so long as morning selling is contained.

First Trade…
Exiting the open at 9:45 under 2088.00 would be to trigger the 2089.50 bias-down signal at 10:15. Exiting the open above 2094.75 would be unlikely 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…
Thursday night’s rally had fulfilled the rally’s 2088.00 objective, probing it by nearly 7 points. Its reaction down had greeted Friday’s open at Thursday morning’s 2084.50 high. Extending down to 2077.50 was recovered through the noon hour to test 2088.00 for the first time intraday. The balance of the afternoon fell to fresh lows testing and retesting 2076.00. A very last-minute plunge slid to 2069.50.

Overnight action’s new info…
Friday’s last-minute plunge wasn’t rejected. Not immediately. Rather, Sunday night’s open extended the slide down to 2066.00. Lower lows eventually touched 2064.25, but a rally at Europe’s opens recovered back up to 2076.00. But no higher as of yet, hovering there for a couple of hours.

If, then…
The overnight low bottomed upon testing this morning’s 2064.50 bias-down target. Despite neutralizing its attraction, the rally’s 2088.00 objective need not be retested intraday. Extending back down immediately is more possible if no gap is left outstanding. So, retracing all of Friday’s late plunge may only prevent a gap from inhibiting an intraday decline. The open must recover more than 2076.00 before beginning to suspect momentum is reversing back up. Momentum reversing back up would likely target a retest of Thursday night’s 2094.75 high.

First Trade…
Exiting the open at 9:45 above 2080.50 would be likely to trigger the 2079.50 bias-up signal at 10:15. Exiting the open above 2075.50 would be unlikely to trigger the 2071.00 bias-down signal. Exiting the open under 2069.50 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…
Thursday’s sideways ranging consolidated Wednesday’s FOMC surge. Gapping down and ranging exclusively in negative territory was pessimistic, but not trending down made that “ineffectual pessimism.” The morning’s touch of 2084.50 resistance was probed momentarily by 2 points before the close.

Overnight action’s new info…
It didn’t take long for the rally’s 2088.00 objective to be met. Its resistance held for 90 minutes before extending higher to 2094.75 through midnight. The balance of the session has drifted back down to test yesterday’s highs as support at 2082.50.

If, then…
Probing new highs — new highs above the year’s earlier pre-crash highs — would require overcoming 2088.00. Not just probing it overnight or intraday, but closing above it. And then closing above it again on the second consecutive session. But if 2088.00  satisfies this rally, then regardless of how high it is probed overnight or intraday, the close should be back below it. And the rejection of probing above it should be acute, spending only nominal time attracting weak-handed buyers before reversing down sharply. The bearish scenario presumes it is weak-handed buyers who have been pushing price higher impatiently, and would sooner exit than defend against a reversal down. Without repeating the overnight test of 2088.00, then closing under yesterday’s 2073.00-2075.00 lows could signal its rejection already underway.

First Trade…
Exiting the open at 9:45 above 2091.00 would be likely to trigger the 2088.50 bias-up signal at 10:15. Exiting the open under 2084.50 would be unlikely to trigger bias-up. Exiting the open under 2077.00 would be likely to trigger the 2080.50 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 Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Rallying aggressively ahead of FOMC proved overly optimistic when the policy statement was released. A 6-point surge to 2079.00 suddenly became a 23-point plunge to 2056.00. But that was recovered, entirely, and then some — by a 30-point rally to 2085.50. This satisfied the outstanding higher close put into play by last week’s confirmed breakout.

Overnight action’s new info…
An overnight drift attacking 2073.00 is probing back under each of yesterday’s highs. While price is consolidating optimistically, that range’s 2071.50 lows has yet to be touched.

If, then…
Can the reaction down from yesterday’s surge be isolated to the overnight action? Rallying from a gap down, and probing a new trend extreme could be bullish — if the recovery were maintained. Rejecting the intraday recovery could be bearish by forming a Pivot Reversal. And if that new trend extreme were to visit the rally’s next higher objective at 2088.00, then a significant top would form. Otherwise, gapping down could extend lower this morning, and still be only a temporary correction.

First Trade…
Exiting the open at 9:45 under 2074.00 would be likely to trigger the 2077.25 bias-down signal at 10:15. Exiting the open under 2068.50 would be likely also to exceed the 2070.75 bias-down target through 10:15 to renew the bias-down signal. Exiting the open above 2080.50 would be unlikely to trigger bias-down.