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…
Sunday night”s plunge to 1960.00 did a relatively small portion of what Friday had been vulnerable to throughout the day. Monday”s session was vulnerable to extending down further, but only attacked the overnight low. At least the entire session was spent in negative territory, and its sellers gained traction for their efforts.

Overnight action”s new info…
Empathizing with China crashing again helped to deliver the rest of what Friday had been vulnerable to — by dropping 31 points to test 1931.00. Consolidating there has broken lower to 1919.50, where a bounce is probing back above 1931.00.

If, then…
We discussed during yesterday”s post-market Wrap that seasonal bullishness surrounding Labor Day weekend all but required resuming the decline without delay, or else it would be delayed until next week. As powerful as the overnight plunge is, there is still a small window to reverse momentum back up. Just gapping down to 1938.00 would form a sort of Island from Thu-Mon price action. Not the sort of Island that requires being retested, but which resumes the prevailing trend. Room for noise under 1938.00 down to 1934.00 must both maintain their breaks through today”s open to maintain the overnight plunge”s momentum. Otherwise, momentum can be pointed back upward for the balance of the morning.

First Trade…
The market is far below this morning”s bias parameters.

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 was eventually retraced to fill the gap back to Thursday”s 1986.00 close. But Thursday”s late 42-point surge (which had been preceded by a 42-point plunge) never resumed. Thursday afternoon”s sellers had gained traction, but their influence on Friday”s session was limited to preventing the recovery from extending. Ranging sideways all day ended by surging back up to and through 1986.00 into and out of the cash session close.

Overnight action”s new info…
Sunday night”s open immediately plunged about 30 points to 1959.25. Flat-to-higher ranging since then — through China”s trading and through Europe”s opens — firmed back up to 1973.00 and 1977.25. A reaction down to 1965.25 has largely recovered.

If, then…
Friday afternoon was vulnerable already to plunging back to Thursday”s 1944.00 low. Sunday night”s immediate plunge doesn”t ensure exploiting that vulnerability, not any deeper than already retracing it by 61.8% to attack 1959.00. Exiting the weekend with extreme sentiment can quickly become a sentiment extreme — so, not extending down quickly this morning can instead begin a recovery back up through last week”s highs.

First Trade…
Exiting the open at 9:45 above 1976.25 would be unlikely to trigger the 1970.00 bias-down signal at 10:15. Exiting the open under 1964.25 would be likely to trigger the 1970.00 bias-down signal at 10:15. Exiting the open under 1960.50 would be unlikely to recover the 1963.25 bias-down target at 10:15, 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…
Wednesday night”s rally into Thursday”s gap up had extended to the first of my corrective bounce limits at 1986.00, up 48 points on the day. That was met by a 42-point plunge to fresh post-open lows at 1944.00. Sellers gained traction for the effort, and then hibernated on their laurels as the balance of the session retraced that plunge. Entirely. A 96-point round trip in the span of two hours.

Overnight action”s new info…
Initially extending yesterday afternoon”s recovery of 1986.00 to fresh highs at 1992.75 proved short-lived. The balance of the night has been retracing the recovery, back down to 1967.50. A 10-point bounce there was retraced entirely, producing a 7-point bounce to 1974.50.

If, then…
Afternoon traction isn”t signaled as often as it has been this week. Also different for the setup is how the market has been rewarding it, by only preventing the opposition from extending, and not by extending the traction. Of course, extending the traction is difficult in the face of such abnormally wide overnight reactions hasn”t been done all week. Is it surprising that a normal resolution may be a creature of normal market environments? Regardless, the consistent feature to this indicator is the context it provides. And if the open doesn”t immediately invalidate the prior afternoon”s traction, then that traction will still determine direction for the next morning and/or afternoon.

So, will yesterday afternoon”s sellers be rewarded by trending under their 1944.00 low today? When the overnight high has been almost 1993.00 and the open is indicated around 1970.00, perhaps we should focus on whether the morning will be attracted next to 1944.00 or to 1993.00, before bothering with what happens after it gets there. As for that potential to trend under yesterday”s lows, I wouldn”t waste my attention on this just yet. But it”s still fun to keep that notion not too far in the backs of our minds to pull out later — especially if the fast-approaching weekend illiquidity is met by retracing even more of yesterday afternoon”s rally.

First Trade…
Exiting the open at 9:45 above 1980.50 would be unlikely to trigger the 1979.50 bias-down signal at 10:15, which WOULD be likely to trigger if the open were exited under 1970.50 at 10:15. And exiting the open under 1964.50 would be likely also to renew the bias-down signal by not recovering its 1969.50 bias-down target at 10:15. Exiting the open above 1986.00 should at least test the 1990.00 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…
Tuesday night”s rally up to 1923.00 was reversed into the noon hour”s 1875.00 low. Despite still probing fresh lows so late in the noon hour, it launched a recovery back to the open”s 1918.00 high. Buyers gained traction for their efforts by exiting the bias environment above the noon hour”s high and then entering the final hour above the bias environment”s high. The final hour extended higher to 1943.00.

Overnight action”s new info…
Initially firming up to 1950.00 was retraced down to 1935.00 ahead of Europe”s opens. That enabled an actual rally leg to extend up to 1964.50. Its reaction down is attacking 1955.00.

If, then…
If not rejected at Thursday”s open, then yesterday”s buyers will be rewarded with control of this morning”s bias environment. And if not rejected going into the afternoon”s bias environment, this morning”s rally would be likely to extend. The overnight rally could be retraced to only a slightly positive starting point before rallying back to its 1964.50 high, with potential for extending up to 1986.00, 1996.00 and 2000.00.

First Trade…
Exiting the open at 9:45 above 1950.00 would be likely also to trigger the 1948.50 bias-up signal at 10:15. Exiting the open above 1960.50 would be likely also to exceed the 1956.50 bias-up target at 10:15 to renew the bias-up signal. Exiting the open under 1947.00 would start to signal the 1948.50 bias-up signal won”t trigger.

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 Tuesday followed pre-open news from China, which had followed an already gigantic overnight rally. But post-open action didn”t improve, and price ranged flat-to-lower until the afternoon”s bias environment had begun lapsing. Even then, there was a false break up above 1920.00 but it never exceeded its 3-minute high before a sell signal triggered under 1917.75. Confirmation from fresh session lows through 3:10-3:20 then extended down gigantically through the close, fulfilling its minimum objective to probe under Monday afternoon”s lows down to 1860.00. Tuesday”s sellers gained traction for their efforts, similar to Monday”s sellers, who have yet to be rewarded for their efforts.

Overnight action”s new info…
Fresh lows down to 1850.50 were recovered to eventually launch a rally that continues rising at this moment. The rally resumed after reactions down from 1904.00 and 1909.00. and now fresh highs are testing 1915.00.

If, then…
Partially retracing yesterday”s late plunge is normal for a correction. It wasn”t necessary before extending down. But anything under 1916.25 is still within the realm of a temporary correction. Regardless, the gap back to yesterday”s close will require being filled at some point. If not already attracting price down through this morning”s open, then a rally could have clear passage through tomorrow”s open.

First Trade…
Exiting the open at 9:45 above 1899.00 would be likely also to exit the bias timing window at 10:15 above the 1891.75 to renew the bias-up signal. Exiting the open under 1878.50 would be unlikely even to trigger the 1880.75 bias-up signal at 10:15.