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…
Monday night’s 33-35 point plunge had consolidated just under 1938.00, whose break would put into play 1918.00. Gapping down under it Tuesday didn’t extend down immediately, but eventually, finally testing 1918.00 as the afternoon’s bias environment began. The balance of the afternoon firmed to 1924.50, and then surged to 1935.00, to within 1 point of the open’s highs. The session’s close was flat with its gap down despite having trended down intraday.

Overnight action’s new info…
Initially dipping to 1924.50 had bounced optimistically into China’s PMI, which disappointed. Its reaction plunged 20 points to 2010.50. So, why was this night different from all other nights? (Okay, wrong holiday.) Because rather than extend the plunge, Europe’s opens were greeted by a bounce back up to 1924.50. And a brief bobble there was resolved up through Tuesday’s highs to 1939.00. That’s being consolidated back down to 1932.00.

If, then…
It’s tough to label as “resilient” a market that is down sharply in a week to fresh two-week lows. But Tuesday’s gap down netted nothing for its effort, and now last night’s plunge has been reversed. Reversing a plunge does suggest that bearish fundamentals have become overly-discounted. Even with today’s exodus of many participants thinning volume, early strength could retrace much of Monday night’s plunge fast, too. Meanwhile, lower lows and lower highs still define a downtrend. And a lot of energy has been expended just to test 1938.00 resistance. So, the recovery attempt will be very sorry if not rallying at the open.

First Trade…
Exiting the open at 9:45 above 1941.25 would likely trigger the 1938.25 bias-up signal at 10:15. Exiting the open under 1931.50 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…
Sunday night’s 1938.25 low had probed under Friday’s low before reversing well into positive territory. Monday’s gap up extended higher to probe above Friday’s intraday highs up to 1969.00. When the bias environment lapsed at 11:30, so did the bullish WedEX influence, unable to prevent a noon hour slide to 1944.25. The afternoon rallied back to 1961.25, but didn’t gain traction for the effort.

Overnight action’s new info…
Globex firmed a little further to 1965.00 before retracing to 1958.00. Sideways ranging had dipped back to its lower-end into Europe’s opens. The bottom literally dropped out as a three-hour plunge fell to 1928.25.

If, then…
There’s no bullish reason to be retesting the same 1945.00 pullback limit that had stemmed Thursday night’s plunge. It also trapped Friday’s late low, and Monday’s noon hour low, both being intraday tests. It’s a different challenge to gap down under 1945.00. And gapping under 1938.00 would break the “lower prior highs” from which 1945.00 is derived. The next lower attraction would be 1918.00; under 1915.00 would target 1899.00. It’s possible this sell-off has become exacerbated ahead of this evening’s Yom Kippur observance, and its afternoon liquidity drain. Exiting the open above 1949.00 would suggest the selling has been limited to overnight action, opening the door to revisit last week’s highs.

First Trade…
Exiting the open at 9:45 back above 1945.00 would be the best chance at recovering the 1948.00 bias-down target in time to avoid renewing 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 gap down to 1949.00 was an improvement from the 1944.25 pre-open low. The morning’s bias environment rallied to 1967.50, but the balance of the session probed lower and lower lows down to 1941.25. Reactions to those lower lows each bounced back above the morning’s low — so, not actually extending down. This accumulative behavior was the afternoon’s only qualification for the bullish WedEX

Overnight action’s new info…
Flat-to-lower ranging didn’t extend Friday’s last bounce up to 1952.25. China’s open erased it, in two legs down to 1938.50. RSIs diverged positively on its retest, launching a reversal that is now probing almost 2 points above Friday afternoon’s bias environment 1957.25 high.

If, then…
The overnight rally could double or triple, and still be irrelevant to the bullish WedEX’s influence which applies only to post-open action. Since WedEX’s influence Friday afternoon was at best accumulative, Monday morning’s price action should behave that much more bullishly to compensate for its delay. While rallying sharply this morning would fulfill the WedEX, don’t lose sight of the possibility that the signal has failed — and that post-open action can trend back down. Regardless, retracing all of Friday afternoon’s bias environment does suggest the drop has been only a correction.

First Trade…
Exiting the open at 9:45 above 1957.25 would be likely to trigger this morning’s 1956.25 bias-up signal at 10:15. Exiting the open back under 1953.50 would be unlikely to recover the bias-up signal in-time to trigger it. [Added 10 minutes later as the market had just surged to 1963.75: Exiting the open above 1964.00-1964.75 would be likely also to exceed the 1962.75 bias-up target at 10:15 to renew the 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…
New recovery highs had been probed already to 1994.00 before Thursday’s FOMC policy statement and Yellen’s Q&A start produced surges to 2000.00 and 2011.75. Yellen’s Q&A start was surrounded by two reactions down to 1976.00, which was being tested into the close. A post-close blip-down extended to 2072.00. Meanwhile, afternoon buyers had gained traction for their efforts by exiting the bias environment at 2:30 above the noon hour’s range and entering the final hour above the bias environment’s range — because of the unusual news flow at the time, and regardless of its subsequent price action.

Overnight action’s new info…
That subsequent price action has resumed. Initially, a retest of 1972.00 had reacted up to 1983.00, and ranged narrowly for awhile supported by 1976.50. That range gave way 2-1/2 hours ago to what has become a 22-point slide testing 1954.50.

If, then…
I had noted during yesterday’s post-market Wrap the room for only a pullback to “lower prior highs” around 1950.00-1955.00. Gapping down to support prevents attracting new sponsorship along the way down. The trick is not to gap down so far that expiration strategies are triggered to reverse direction in the same way the week’s earlier rally became a perpetual motion machine pointed higher. This is either done by holding a retest of support, or signaled by already recovering high enough into the open. Opening back above the 1956.75-1961.25 “running correction” we had monitored during Wednesday’s rally would suggest the latter. Opening under 1952.75 would dash the former. Meanwhile, this being expiration, trending through the opening 15 minutes would be predictive. And this being expiration, regardless of the opening action, trending at all can get carried away in either direction.

First Trade…
Exiting the open at 9:45 above 1961.25 and 1964.50 would be increasingly likely also to recover this morning’s 1965.00 bias-down target in time to avoid renewing the bias-down signal at 10:15. Exiting the open under 1956.75-1957.50 would be much less likely to recover the bias-down target.

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 morning’s noN-bias environment extended higher nonetheless, lifting off from the 1970.00 area through its 1977.00 target. The afternoon fulfilled potential to 1985.00 up to 1987.00. The close triggered a bullish WedEX. But buyers didn’t gain traction for the effort — in fact, the bias environment exit was under the noon hour’s low. A post-close surge touched 1989.00.

Overnight action’s new info…
Choppy flat-to-lower ranging has worked its way down to 1981.00 That slightly overlaps the highs of both yesterday morning’s bias environments, while dipping under the noon hour’s 1983.50 highs.

If, then…
The rally satisfied 1977.00 and 1985.00 targets yesterday. Not in the same timing window, and not without a corrective dip between them, but in the same session anyway. So much buying pressure satisfied so recently should naturally devolve into a pullback, even in the most bullish scenario. Anxiousness ahead of FOMC statements can cause a defensive pullback in a hesitating environment. So, it might seem a likely catalyst to profit-taking when there are such great profits to take. Perhaps. But yesterday’s targets were less a product of fulfilling previous optimism, and more of position-jockeying ahead of expiration. No doubt, the recovery is extended, but it’s vulnerable to becoming more extended. Delaying a logical pullback much past the open could spark a counter-intuitive upleg into noon. I’ll be prepared for a morning pullback if that’s indicated, but the market seems intent upon greeting this afternoon’s FOMC events optimistically.

First Trade…
Exiting the open at 9:45 under 1985.00 would be unlikely to trigger the 1988.25 bias-up signal at 10:15. Exiting the open above 1989.75 would be likely to trigger bias-up. Exiting the open under 1978.00 would be likely to trigger the 1979.50 bias-down signal.