The First Trade

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Monday’s low had fulfilled the decline’s next lower objectives at 2361.00 and 2345.00, but that didn’t prevent Tuesday night’s open from plunging to test 2317.00. It wasn’t a “new Globex trend extreme” requiring intraday retest, and Wednesday’s post-open surged to 2387.00. A reaction down filled the gap back to Monday’s 2352.00 cash session close, which held through the morning. Rallying into the noon hour probed fresh session highs during the afternoon bias environment, which rejected before entering the final hour. More than marginalizing sellers, this setup creates a vulnerability to extend the intraday trend, which it did by adding 55 points to attack 2478.00. That is almost half of yesterday’s net gain.

Overnight action’s new info…
The first reaction to Wednesday’s final hour 55-point surge was to retrace it by 61.8% and attack 2456.00. Consolidating until midnight surged to probe a fresh high up to 2481.50. A brief, fresh high that was soon retraced to 2456.00. Then through it, into and out of Europe’s opens, retracing all of the last 55-point surge back under 2423.00.

If, then… (notes to accompany the Tour recording)
Bending a familiar phrase: What can go up a lot, can go down a lot. Large intraday moves reflect not only an oversold or overbought condition, but also the range for play. Wednesday’s record-setting 161-point rally from Tuesday night’s low reflects the degree of having been oversold, and the room for noise. It also rewarded buyers for absorbing sellers, apparently too much, too soon, to be maintained. Wednesday’s last intraday upleg was no different in principle than Sunday night or Tuesday night’s opening plunges which created extremes. Some degree of pullback was likely since trend reversals aren’t signaled by the same session that contains a prior trend’s extreme — and a resuming the decline is still possible since yesterday’s rally doesn’t yet qualify as a trend reversal. And there’s still room up to 2525.00 and 2607.00 without yet qualifying as more than a temporary correction that resumes the decline. Meanwhile, Wednesday was day-9 of what may be an Up/Down-Crash setup forming, which can be disqualified by a second consecutive up-day today. Regardless, I’m still reluctant to pronounce a bottom forming without there first being a capitulative session, or two.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2440.25 would be unlikely to recover the 2448.25 bias-down target at 10:15, which would renew the bias-down signal. Exiting the open above 2461.00 would be unlikely to trigger the 2454.25 bias-down signal at 10:15.

Reminder: I’m away from the screens through the morning, but chaRTroom will be open.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Sunday night’s gap down to attack 2400.00 had been recovered and reversed into positive territory to test 2434.00 by midnight. That ended at Europe’s opens and reversed in time to greet Monday’s open attacking 2390.00, then sliding to 2368.00. Bouncing back into Friday’s range up to 2412.50 was reversed through the balance of the session to fulfill the next major objective at 2355.00 down to 2351.00 at the cash session close. Futures slid to 2340.50.

The one-year anniversary of (reporting) a high-profile stock gift.

Overnight action’s new info…
The open blipped-up to 2351.00 and then plunged to test 2317.00. All within the first 10 minutes. Most of it had been retraced 10 minutes later. More so another 10 minutes after that, testing 2353.00. Another dip down to 2325.00 held through midnight, rallying since then to test this morning’s 2361.00 bias-up target. Now a spike up has touched 2369.00. The plunge was a singular leg, and its retracement never probed lower, so it is not a “new Globex trend extreme” that would otherwise require intraday retest.

If, then… (notes to accompany the Tour recording)
Reminder: I’m away from the screens through the morning, but chaRTroom will be open. Did Monday’s decline express so much negative sentiment, that last night’s plunge overdid it? These overnight lows don’t require a retest intraday. And having probed the prior intraday low overnight, opening above the 2353.50 earlier Globex high could form a bullish Globex-flip. Tuesday’s intervening holiday closure makes the setup less reliable, but it would be credible so long as Monday’s 2351.00 low remained untouched. Otherwise, already reversing down before or through the open would likely retest the overnight low — and lower, if its retest were to form another spike low.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2366.00 would be likely to trigger the 2361.00 bias-up signal at 10:15. Exiting the open under 2357.50 would be unlikely to trigger bias-up.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Thursday night’s narrow overnight range had dipped only slightly and briefly before Friday’s expriration open, and before bouncing back to earlier overnight highs testing 2492.00. A post-open headline reaction surged to 2508.00. Having stretched the rubber band once again, the market snapped back down, extending eventually down to new lows at 2409.25. The afternoon was influenced by a bearish WedEX, as liquidity evaporated ahead of a 3-1/2 day weekend.

Overnight action’s new info…
Sunday night’s Globex open gapped down to meet the 2402.00-2405.00 target that had been established intraday Friday. Bouncing back to unchanged extended through a 2419.00 buy signal on the way to its 2434.00 target. A 7-1/2 dip was recovered to retest the high into Europe’s opens. But any influence of ES stability was quickly absorbed, and a 13-point dip just begat a 31-point collapse down to fresh lows at 2395.50 — testing this morning’s 2398.25 bias-down target, and having sufficient complexity to form a “new Globex trend extreme” that requires intraday retest.

If, then… (notes to accompany the Tour recording)
Last night I published a few thoughts about the potential for a “bottom,” (here, if you haven’t yet read it). Its two primary thrusts are that 1) we should be aware that a near-term low can appear at any time, and 2) a near-term low can be under Friday’s close by triple digits, perhaps 2,000 Dow points or more. Today’s restrained volume and early close make it a wild card — it’s difficult to get sponsorship that starts trending, and difficult to stop if it starts. Regardless of the holiday factors, delaying this overnight reaction helps today to avoid an UNusual meltdown. Another usual meltdown today would have room down to the next lower objective at 2345.00-2361.00. An intraday rally is unlikely due to the bearish WedEX influence, but 2454.00 would be its likely objective.

First Trade…
[Click here to view the Bias parameters] Exiting the open under 2416.00 would be unlikely to trigger bias-up at 10:15. Exiting the open under 2403.00 would be likely to trigger the 2405.00 bias-down signal. Exiting the open at 9:45 above 2424.00 would be likely also to trigger the 2421.00 bias-up target.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Thursday’s open was the first in several sessions not to be greeted optimistically. Probing fresh lows overnight down to 2476.50 had recovered to form the basis of an Isolation setup. Bouncing to 2418.00 came too early to attract necessary reinforcements, and the setup failed. Its resolution was as bearish as it would have been bullish, trending down sharply to 2441.00 before the afternoon bias environment began lapsing. Its reaction up to 2490.00 held prior resistance, chopping wildly back down to 2456.00 through the close.

Overnight action’s new info…
Yesterday’s late wild, choppy range has essentially persisted overnight. The differential between Thursday’s cash session and futures closes was 20 points, from 2466.00 to 2586.00, as one of those wild chops snapped back up. Its snap-up continued until probing a fresh high attacking 2492.00, and then ranged sideways down to 2477.00. The relatively narrow ranging persisted until Europe’s opens, which launched a dip down to 2467.00. That’s also this morning’s bias-down signal, and RSIs diverged positively into its retest. But bouncing back up into the earlier range at 2480.50 has yet to extend any higher.

If, then… (notes to accompany the Tour recording)
Thursday’s lack of excessive or ineffectual optimism included rejecting one or two potentially bullish opening setups. Less and less hopeful influences suggests that the decline is nearing a capitulative or exhaustive phase, or at least vulnerable, just in time for Friday afternoon’s bearish WedEX influence. And last night’s action is neither hopeful, nor has it discounted price to attract buyers. I’d still watch for bounces as the holiday illiquidity gets exponentially closer — Thursday met and held decline’s next major target at 2453.25, which evaporating volume could leverage for a counter-trend rally. Of course, evaporating volume can cut either way. And 2453.25, like the decline’s prior objectives, didn’t close above a prior relevant level (e.g. 2500.00) that might have started sealing a bottom. Anyway, trend lows don’t coincide historically with expirations. That doesn’t preclude a bounce attempt, but nothing durable is likely near-term.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2475.75 would be unlikely to trigger the 2467.25 bias-down signal at 10:15. Exiting the open under 2461.00 would be likely to trigger bias-down.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Optimism remained alive and well at Wednesday’s open, regardless of the past two sessions’ fresh lows down to 2530.00. An overnight rally to 2562.00 gapped up, and extended intraday to greet the afternoon’s FOMC statement probing Tuesday’s 2578.00 highs. The knee-jerk reaction spiked up even higher to 2592.00. But it was doomed to failure because the open’s gap up was under Tuesday’s late high. The optimism was reversed back down to 2530.00, which was met on the way to 2500.00 and lower. The 2489.50 low reacted up to spend the final hour ranging back up to 2519.00, closing around 2505.00. Actively bearish WedEX was signaled.

Overnight action’s new info…
Another bounce attacked 2519.00 before rolling over to fresh lows. The slide pierced what is this morning’s 2478.25 bias-down target to 2476.00 at midnight, and bottomed there. Reacting up since then has recovered back above yesterday’s lows, even attacking the upper-end of its final hour’s range at 2518.00.

If, then… (notes to accompany the Tour recording)
A lot of relevant attractions are being neutralized, but the decline still has room down to 2453.00, A durable bottom will have formed when a couple of objectives are recovered through a couple of consecutive closes. None of which precludes another bounce, which the overnight low’s Isolation setup might produce. It will need the open and then the morning to hold above yesterday’s lows, and any less strength would likely resume the decline — even a Globex-Flip setup is trying to form. So, the question is whether sponsorship for a bounce can be generated after punishing recent bounces. Since the answer is probably not, then we’ll anticipate the overnight recovery failing this morning, if not already having failed by the open. Otherwise, I’m going to be suspicious of an Isolation setup, but I’ll still give it a benefit of the doubt until disproved — Santa Claus and his rallies have pulled off miracles before.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2497.75 would be less likely to trigger the 2492.25 bias-down signal at 10:15. Exiting the open under 2490.75 would be likely to trigger bias-down.