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 held its 1998.00 limit to signal that overnight selling was not bleeding into the cash session. The consequence was to reject both bias-down parameters and put into play both bias-up parameters. The 2016.00 bias-up target was only attacked to within 5 ticks, but it did not become “unfinished business above” since the bias environment was exited back under its 2011.00 bias-up signal. The balance of the session trended back down to fresh lows at 1993.50 support. Potential for extending down to 1988.00 created a compelling hold-short setup.

Overnight action’s new info…
The 1988.00 attraction was soon attacked to within 6 ticks. A 7-point range since then has been centered around 1993.50, which is being overlapped now.

If, then…
The hold-short for 1988.00 was considered within the context of its test being likely to react up overnight. Not already testing it and reacting up does create room for a lower test, whether by 1 point or by 2-1/2. The setup’s template for a pre-open recovery would still be possible — but keeping to the timetable would require a steeper recovery. Not yet probing fresh overnight lows before opening positive would be more likely to reverse back down.

First Trade…
Exiting the open at 9:45 above 1993.50 would be unlikely to trigger the 1988.00 bias-down signal at 10:15. Exiting the open under 1987.00 would be likely to trigger bias-down. Exiting the open above2004.00 would be likely to trigger the 2001.50 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…
Volatility was inhibited Monday by the Columbus Day holiday, which maintained the ongoing ranging around 2006.00-2007.00. But the only attractions were higher, and no sell signals formed. The afternoon had repeatedly peaked at 3 ticks above its 2007.00 resistance. Firming during the final hour eventual surged through the Globex open to touch Friday’s 2014.00 pre-open high.

Overnight action’s new info…
That late surge was in reaction to dovish Fed comments, and eventually retraced entirely back down to 2006.00-2007.00. Europe’s opens triggered a slide testing 1997.00. A consolidation there has broken higher, now testing 2004.25.

If, then…
Thursday afternoon’s bias environment had been resisted up to 1997.00. That’s where the bias environment’s exit triggered a breakout during its late surge that attacked 2009.00. So, 2009.00 is the likely reward for the 1997.00 area holding a test as support. Conducting the test overnight can dilute the reward, but it does represent more sellers having been satisfied. And any sell-off attempt recovered through a relevant timing window can have the effect of a stretched rubber band snapping back up. But that probably depends also on not triggering bias-down this morning.

First Trade…
Exiting the open at 9:45 above 2007.00 would be unlikely to trigger the 2004.25 bias-down signal at 10:15. Exiting the open under 2001.00 would be likelier to trigger bias-down. Exiting the open under 1998.00 would be likely also to exceed the 1999.50 bias-down target at 10:15 to renew the 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…
.Friday’s session ranged sideways widely, probing fresh highs above last month’s 2011.75 prior high and retesting 2000.00 as support. But the close was essentially flat-to-positive above 2006.00, and no traction was gained either way

Overnight action’s new info…
Gapping down slightly Sunday night then rallied gradually until touching Friday’s 2012.50 high coming out of Europe’s opens. A quick reaction down from there has been ranging more narrowly around unchanged at 2006.00-2007.00.

If, then…
Today is a Federal holiday that closes banks and bond markets. This reduces participation and liquidity, and therefore also volatility. Trending is difficult to get started, but also difficult to stop once begun. Probing last month’s prior highs more significantly remains likely up to 2019.50. But not with any particular timing, so today is vulnerable to anything.

First Trade…
Exiting the open at 9:45 under 1999.50 would be likely also to trigger the 2001.00 bias-down signal at 10:15. Exiting the open above 2005.50 would be unlikely to trigger bias-down. Exiting the open above 2012.50 would be likely to trigger the 2011.00 bias-up signal… Remember that holding the test of a bias signal through 10:15 would put into play an offsetting test of the opposite bias 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 morning was mechanical. Its sideways ranging held relevant support at 1977.00 through its relevant 10:15 time to create upside targets at 1998.00-1999.00. The afternoon’s FOMC Minutes release was as responsible for creating that mechanical morning, as it was for breaking it. Already rallying before the news triggered a spike up that eventually extended to within 3 points of last month’s 2011.75 high. Closing above 2000.00 kept alive potential fo rewarding the afternoon’s buyers for gaining traction, having exited the bias environment above the noon hour’s highs and entering the final hour even higher.

Overnight action’s new info…
Choppy sideways action has done nothing to contradict the upside traction, or to fulfill it prematurely. Probing fresh highs up to 2010.50 greeted Europe’s opens by plunging down to 1999.00. That has been recovered almost entirely to within 3 ticks. Each extreme is within a couple of ticks of this morning’s bias signals, suggesting that the ongoing pattern’s influence remains intact.

If, then…
Traction gained in the afternoon is usually rewarded the following morning by extending in that direction. Already extending much higher.that afternoon can moot the signal, but the late dip back down to 2000.00 neutralized that concern. Recently, trending sharply overnight has tended to fulfill that reward, but that’s not a factor currently.

First Trade…
Exiting the open at 9:45 above 2000.00 would be unlikely to trigger the 1999.50 bias-down signal at 10:15. Exiting the open above 2011.75 would be likely to trigger the 2011.00 bias-up 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…
Gapping up Wednesday and extending higher to 1991.00 had indicated that strong-handed buyers were taking control after Tuesday’s corrective session. That didn’t prevent the open’s rally from being retraced back to unchanged at 1967.50, but it did indicate that action was counter-trend. In fact, consolidating after filling the gap back to Tuesday’s close was followed by another rally leg back into the morning’s highs. Another reaction down retraced the afternoon’s no-bias trending, and was then recovered into the close, fulfilling an outstanding target at 1988.75.

Overnight action’s new info…
Yesterday afternoon’s late recovery has not extended higher. Instead, yesterday’s no-bias trending was retraced again, and then lower to 1971.00. Now another bounce is testing 1982.00.

If, then…
Buyers didn’t gain traction for yesterday’s efforts, so extending the rally this morning requires gapping up. At least, a durable rally requires gapping up. Probing positive territory from a weaker open could still be productive before failing — there are a lot of news and Fed speakers scheduled, and FOMC Minutes this afternoon. Gapping up and extending higher could retest the FOMC high today or tomorrow. As for gapping down, there is no greater likelihood between ranging narrowly or trending down.

First Trade…
Exiting the open at 9:45 above 1981.00-1982.00 will likely avoid triggering the 1979.00 bias-down signal at 10:15. Exiting the open under 1977.00 would likely trigger bias-down.