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…
Gapping up more than 13 points Monday to 2086.00 immediately surged even higher to attack 2095.00. The balance of the session extended higher, still, to probe the morning”s 2100.00 target by 3 ticks. No unfinished business was left outstanding, and buyers did not gain traction for their efforts.

Overnight action”s new info…
Initially probing another point higher to 2101.75 had settled back down to 2098.25 where China”s devaluation triggered a steep slide. Ranging 3 points either way around 2091.00 gave way to a lower low testing 2085.50. Its reaction up to 2092.25 has fallen back down to 2088.00.

If, then…
Before Monday afternoon signaled that trending was done, triggering a sell signal would have targeted 2091.00 and 2088.00. Avoiding that sell signal made extending higher Tuesday likelier. Extending higher would have required gapping up, which looks unlikely from a 10-14 point deficit currently. Trending back down is not the only alternative, but may be unavoidable if the open isn”t recovering 2088.00 and 2091.00.

First Trade…
Exiting the open at 9:45 under 2091.00 would be likely to trigger the 2095.50 bias-down signal at 10:15. Exiting the open under 2087.50 would be likely also not to recover the 2088.75 bias-down target and 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 open gapped under 2077.00 and probed under 2073.00 down to 2062.00. A late surge originated both too late and too early to be sponsored by strong hands. It managed to end at 2073.00, but not above it, let alone above 2077.00. If not for being a Friday, which can be noise, then the close would have put into play the next downleg.

Overnight action”s new info…
Sunday night”s open barely delayed extending higher, and eventually touched 2080.75. Europe”s opens changed the sentiment, launching a drop to 2074.00. It lasted just over an hour, and then took less time to recover almost entirely. An errant tick just touched 2081.00.

If, then…
2081.00 is about 2 points short of being the difference between refueling sellers, and trapping them. Exiting the weekend with extreme sentiment can often be a sentiment extreme. It”s difficult enough already for mid-week overnight rallies to bleed into the following session. Gapping open sharply on Mondays has a small window to attract new sponsorship. Meanwhile, just temporarily correcting Friday”s break under 2077.00 has resistance up to at least 2082.50 that must be recovered almost immediately, or else retrace the gap and then some.

First Trade…
Exiting the open at 9:45 above2080.00 would be likely also to trigger the 2077.00 bias-up signal at 10:15. Exiting the open above 2084.25 would make the 2082.50 bias-up target likelier to be exceeded through 10:15 to renew the bias-up signal. Exiting the open under 2073.00 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…
Thursday”s opening dive extended down 28 points through its 2070.00 noon hour low. The balance of the session trended up to test and retest 2080.00. The 2082.25 target of another buy signal was still in-play. The cash session close was at 2077.00, neither breaking it to trigger lower targets, nor recovering above it to confirm that its support had held. No oversold RSIs or other unfinished business was left outstanding below.

Overnight action”s new info…
The buy signal targeting 2082.25 had been threatened by a last-minute 5-point dip, which had ended within 3 minutes to maintain the signal”s momentum. The target”s test defined the overnight high, which reacted down to 2080.00, and then slid to 2075.50 into Europe”s opens. A 6-point recovery was retraced to back under 2077.00, which is being tested now ahead of this morning”s Employment Situation report.

If, then…
I highlighted the 2082.25 target being met to make clear there is no nearby unfinished business above. No upside attraction can be relied upon this morning to prevent or to inhibit extending the decline under 2077.00. So, rallying anyway would be that much more credible for extending higher intraday. Similarly, there is no unfinished business below requiring a retest before enabling a rally. Reacting down to this morning”s payrolls report must be isolated to an otherwise irrelevant timing window — pre-open, or the opening 15 minutes — to avoid gaining traction for a deeper and possibly much steeper slide into the weekend.

First Trade…
There are no preliminary levels ahead of an Employment Situation report. Join me in the chaRTroom at8:55am ET for the pre-market Tour to interpret the market”s reaction and to game out opening strategy.

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”s open resumed and extended the overnight rally, renewing the bias-up signal, and testing the 2105.50 renewed bias-up target to 2107.00. That ended with the morning bias environment”s exit, which began a 15-point slide to 2091.00 into the afternoon bias environment”s entry. A corrective bounce to 2098.50 resumed sliding into the close, leaving the afternoon”s 2088.75 bias-down target outstanding.

Overnight action”s new info…
The late slide extended to within 1 tick of Wednesday”s low at 2091.00. Bouncing 5 points to test 2096.00 in positive territory retraced the slide by 61.8%. Its reaction down has held 2092.00.

If, then…
Wednesday afternoon”s corrective bounce was intended to restart the decline so it could fulfill unfinished business below at the afternoon”s 2088.75 bias-down target. That could have been neutralized overnight by testing it, or neutralized overnight by rallying back above Wednesday afternoon”s highs. Not doing either makes the decline likely to resume this morning, still capable of holding a test of 2088.75, but not as likely — and now it is also this morning”s bias-down signal.

First Trade…
This morning”s preliminary signals don”t seem very informative. Exiting the open at 9:45 under 2088.00 would be likely to trigger the 2088.75 bias-down signal at 10:15. Exiting the open above 2097.50 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…
Tuesday morning”s no-bias environment tested its 2095.50 bias-up signal before being dragged down into the afternoon to 2081.50. Bouncing back up to 2090.00 still managed only barely to close above the relevant 2084.00 and avoid putting into play 2077.00. But it was an “inside day” that had little predictive value, apart from leaving oversold RSIs outstanding at the low which require a retest.

Overnight action”s new info…
After ending the day at Tuesday”s lows, overnight rallying is attacking Tuesday”s highs. Initially attacking Tuesday”s 2081.50 low to within 3 ticks has since trended back up, eventually probing above Tuesday”s late 2090.00 high, and the afternoon bias environment”s 2092.25 high, now within 1 tick of yesterday”s 2096.25 high.

If, then…
Fresh lows testing 2077.00 become more likely as a recovery is delayed. And the vulnerability increases for gapping down. So, it”s fitting that the vulnerability below can be neutralized by gapping up — above Tuesday afternoon”s 2092.50 high. Greeting the cash session from within Tuesday afternoon”s range would still be vulnerable to trending down intraday. And having rallied so strongly and relentlessly overnight, the biggest threat to a rally is if new sponsorship isn”t attracted after expending so much energy overnight.

First Trade…
Exiting the open at 9:45 above 2092.50 would be likely to trigger the 2091.00 bias-up signal at 10:15. Exiting the open above 2099.25 would be likely also to exceed the 2098.50 bias-up target at 10:15 to renew the bias-up signal. Exiting the open under 2088.00 would be unlikely to trigger bias-up.