The First Trade

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

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Through the prior close…
Unfinished business below kept alive the ongoing decline. Wednesday”s outstanding requirement to test 2093.50 was Thursday”s opening print. But that was too late for it to suffice, and had since required also testing 2085.00-2086.50. So, the open”s bounce to 2098.00 resistance was reversed sharply to thoroughly test its new target. Its recovery attempt was reversed into the noon hour, ultimately breaking support to fulfill the next lower targets at 2077.00 and 2070.00. A last-minute bounce to 2083.00 fulfilled near-term buying pressure.

Overnight action”s new info…
While 2082.75 was a near-term target of yesterday”s last-minute bounce, there was also potential to 2086.50. It was eventually met by relatively calm, flat-to-higher ranging. A shallow pullback into Europe”s opens is now being recovered to a fresh high at 2088.00 .

If, then…
Did the Friday Factor already exacerbated the decline by accelerating selling pressures into Thursday? Several major markets are closed today for May Day (China, Russia, Germany, and Singapore). Since sellers gained traction for their efforts yesterday — by exiting the bias environment under the noon hour”s low and entering the final hour lower — trending up immediately would require gapping up above yesterday afternoon”s 2090.00 bias environment high… which is being attacked now.  This being a Friday, the morning”s bias is likely to persist through the noon hour. So, triggering bias-up could extend sharply higher through the morning. The alternative would target at least a retest of yesterday”s oversold lows.

First Trade…
Exiting the open at 9:45 above 2086.50 would be likely also to trigger the 2084.75 bias-up signal at 10:15. Exiting the open above 2093.50 would be likely to renew the bias-up signal by also exceeding the 2090.00 bias-up target through 10:15. But exiting the open under 2080.75 would be unlikely to trigger bias-up.

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

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Through the prior close…
Seeking out buyers at lower and lower levels. Tuesday”s recovery had failed to attract new sponsorship above its 2110.25 intraday high, forcing it to seek out buyers below. Its 2098.00 pullback target defined Wednesday”s open and the bias environment”s low. The noon hour”s dive to 2090.50 was recovered in time to greet the FOMC statement from above 2098.00. Rallying to 2108.00 was a little premature, and the day ended back at 2098.00.

Overnight action”s new info…
Europe”s opens again marked a different tenor as sideways ranging until then suddenly broke lower. Yesterday”s low was pierced by 1 tick at 2090.25. Headlines have been active on BOJ, Ruble, and Greek pension payments.

If, then…
Yesterday”s FOMC reaction was inhibited from extending higher, because of excessive optimism during its initial reactions down to 2095.25. It could have been remedied yesterday at 2093.50. Having tested 2093.50 overnight, gapping up today above 2104.25-2105.00 and extending through yesterday”s highs above 2108.00 would serve by proxy for the delay. Otherwise, the delay now requires retesting Tuesday”s 2088.25 low. Too low could start to attract much more substantial selling pressure.

First Trade…
Exiting the open at 9:45 under 2090.00 would be likely also to trigger the 2093.50 bias-down signal through 10:15. Exiting the open under 2085.00 would be unlikely to recover the 2086.50 bias-down target by 10:15, renewing its bias-down signal. Exiting the open above 2101.50 would make the bias-down signal unlikely to trigger.

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

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Through the prior close…
Tuesday morning”s dive from 2104.25 to 2088.25 was recovered into the bias environment”s exit. Probing under the bias-down signal and two bias-down targets was rejected back up to 2110.25. The critical 2090.00-2095.25 range held another test. What could be more bullish? Attracting new sponsorship. But the only probe higher came into the futures close, which reached 2112.50.

Overnight action”s new info…
Downtrending into Europe”s opens reach 2108.00, then recovered to Tuesday”s 2112.50 post-close high. Rather than extend higher, the lows were just probed down to 2106.00. 

If, then…
A proxy to attracting new sponsorship yesterday afternoon would be to gap up this morning. That likelihood looked much better 3 hours ago when yesterday”s 2112.50 post-close high was being retested. Opening back under yesterday”s highs could still qualify by surging immediately. Otherwise, the most bullish scenario would be to back-and-fill ahead of this afternoon”s FOMC policy statement. But then, greeting the news from a position of weakness would be problematic if yesterday”s lows had not already held a retest.

First Trade…
Exiting the open at 9:45 under 2101.50 would be likely also to trigger the 2104.25 bias-down signal at 10:15. Exiting the open above 2111.00 would be likely at least to test the 2112.75 bias-up signal, which would likely trigger after exiting the open above 2114.75.

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

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Through the prior close…
Monday”s test and retest of the morning”s 2119.75 bias-up target was supported by its 2113.75 bias-up signal. The bias-up environment was then spent chipping away at that support. That prepped the afternoon for a drop to 2100.25, testing the ~2103.25 “lower prior highs” which had finally broken Thursday. Its reaction held 2104.25-2105.00 resistance ahead of AAPL”s post-close earnings.

Overnight action”s new info…
Retesting a breakout point is common before resuming the breakout. But it was the wrong timing window to expect it to hold. A failure from bouncing to 2104.25-2105.00 was likely. And despite AAPL”s pop on earnings, Monday”s 2100.25 low attracted price back down. Attacks on it stopped optimistically short — which is potentially bearish from a contrarian perspective — before inevitably breaking lower. This morning”s 2095.25 bias-down target was just touched, reacting up almost 3 points from there.

If, then…
Recall that 2095.25 is the upper-end of a 5-point support range, which had been instrumental during the prior two weeks. The timing of its recoveries helped us to maintain confidence in new highs throughout continued intraday and overnight dips/plunges. Now comes another test, under the guise of correcting a breakout, during an otherwise irrelevant timing window. Avoiding bias-down, let alone recovering positive territory through the open, could launch a powerful intraday rally. That would require overcoming a tendency for extending the reaction from Monday”s opening sentiment extreme into Wednesday morning. So, bias-down can still be renewed.

First Trade…
Exiting the open at 9:45 under 2093.50 would be unlikely to recover the 2095.25 bias-down target by 10:15, renewing the bias-down signal. Exiting the open above 2103.50 would be unlikely to trigger the 2100.25 bias-down signal at 10:15. 

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

Enter the chaRTroom here
(pre-open Market Tour begins at 8:55 ET)

PROGRAMMING NOTE: A weekend conference room update to the ilinc software is locking out XP systems. An ilinc Sr. Manager advises deleting all instances of previous ilinc and Mitel versions before trying log-in. I tried this on an XP-loaded machine (files I found are listed below*) but without success. We won”t have additional tech support until  mid-morning. Meanwhile…

CLICK HERE FOR A SEPARATE ENTRY IF ENCOUNTERING DIFFICULTY

Files to remove: ilinc-web-services*, join-session*, mitel*
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Through the prior close…
Friday”s noon hour pierced Thursday”s high by a single tick, touching the afternoon”s 2114.75 bias-up signal as resistance. Otherwise, it was an inside day, contained entirely within Thursday”s range. Actually, within Thursday afternoon”s range, optimistically avoiding a dip back under the prior highs that Thursday morning”s surge exceeded. That was a breakout, and Friday”s inside day didn”t confirm it, despite being a new trend high close.. The entire session ranged in positive territory without extending higher, which is “ineffectual optimism.”

Overnight action”s new info…
Narrow ranging 1 point either way around 2112.75 suddenly surged to 2116.50 into Europe”s opens, presumably on expectation of China doing a round of QE. Europe”s concerns over Grexit immediately drove price down sharply to 2108.50. A relentless retracement recovered it all to now retest the initial high up to 2118.00.

If, then…
Friday”s complacency after Thursday”s breakout was a sign of things to come, but not necessarily a sell signal. The condition tells us to monitor for the next probe of fresh highs. Having reserved its energy Friday, will Monday compensate for the delay with a new breakout close, or will an intraday probe of fresh highs only stretch the rubber band to be reversed and to close negative. Either resolution could extend into Wednesday morning ahead of that afternoon”s FOMC policy statement.

First Trade…
Exiting the open at 9:45 above 2115.50 would be likely also to trigger the 2113.75 bias-up signal 30 minutes later at 10:15. Exiting the open under 2110.00 would be unlikely to trigger bias-up.