The First Trade

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)

Through the prior close…
Surging into the noon hour to a new high at 2112.75 began a relatively narrow range back down to 2109.50 until the 3:10-3:20 timing window. The window”s blip-up to new highs at 2114.50 was retraced back down to the morning”s high, just touching it, which was just enough to undermine the breakout attempt. Its reaction down extended to 2106.00, a multi-session breakout.

Overnight action”s new info…
Gyrating down to 2103.00 had ended in time to start firming into Europe”s opens. A 10-point rally from there pierced yesterday”s 2112.75 noon hour high. Headlines focused on EU finmins dressing down the Greek finmin accompanied a reaction down to 2105.50. That has now recovered to test 2110.00.

If, then…
What? No overnight plunge? Seems like the market has finally entered its next stage, as has been expected. Also expected is that this stage is brief, and that it ends poorly. A new high close on Fridays is all but assured to recover eventually from reacting down on Monday, which would be the case anyway for confirming yesterday”s breakout. None of which would affect whether new highs are likely to be brief, only the timing of their ending poorly — sooner and more horribly if missing the opportunity to entrench the rally. To the degree that today”s close will reflect sentiment, it may also be predictive of reactions to high-profile Tech and Biotech earnings early next week (e.g. AAPL, GPRO, GILD). Meanwhile, this being a Friday, the morning”s bias signal tends to persist through the noon hour.

First Trade…
Exiting the open at 9:45 under 2106.75 would be unlikely to trigger the 2114.75 bias-up signal at 10:15. Exiting the open under 2098.00 would be likely to trigger the 2101.50 bias-down signal.

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)

Through the prior close…
Wednesday afternoon”s “no-bias trending” above the 2098.25 bias-up signal could have been dismissed if buyers had gained traction for the effort. But exiting the bias environment at 2101.50 above the noon hour”s 2098.50 high didn”t attract strong-handed sponsorship. An eventual fresh high attacked 2104.00, but only after the 3:10-3:20 window that would otherwise have extended higher. Instead, it reacted down toward the 2098.25 bias-up signal that had been broken prematurely.

Overnight action”s new info…
Even then, Wednesday”s 2098.25 bias-up signal didn”t require being retraced, since it had not held decisively when it mattered most. But it was soon tested overnight anyway, touching Wednesday morning”s 2097.25 highs. Then the bottom dropped out — again — sliding through Europe”s opens to 2087.50. Its recovery up to 2098.00 has dipped back down to 2093.00-2095.00.

If, then…
Another day, another overnight plunge. So… Another overnight plunge, another intraday recovery? As I detailed during yesterday”s post-market Wrap, that which hasn”t killed the market doesn”t necessarily make it stronger, but it does earn an obligatory probe above the range. This reward for having absorbed so much selling pressure assumes that selling pressure hasn”t first chipped away entirely at support. Either down here, or up there, buyers will find none others remain to be attracted. The obligatory reward for buyers does have a shelf-life, which is less like an expiration date, and more like a battery”s charge. Potential to new highs remains alive so long as the charge”s reading holds above 2090-2095 through every relevant timing window. It”s being challenged again now, and GM and MMM just missed earnings expectations.

First Trade…
Exiting the open at 9:45 above 2097.50-2098.25 would be unlikely to trigger this morning”s 2095.25 bias-down signal at 10:15. Exiting the open under 2090.00 would likely trigger bias-down. Exiting the open under 2088.00 would become unlikely to recover the 2089.50 bias-down target at 10:15, which would renew the bias-down signal.

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)

Through the prior close…
Monday night”s rally back to last week”s ~2105.00 highs wasn”t repeated intraday Tuesday. Instead, a post-open decline finally bottomed upon attacking 2087.00 during the afternoon bias environment. The session ended between the prior session”s 2091.00-2093.00 futures and cash closes.

Overnight action”s new info…
An extremely narrow 2-point range around 2093.00 suddenly surged at Europe”s opens. Peaking abruptly at 2098.50, and consolidating briefly, then sliding suddenly down to 2093.00 — that was just misdirection. Moments later, a plunge was testing 2082.00, where Sunday night”s plunge was first consolidated. That was 3 hours ago, during which an Expanding Triangle has formed between 2080.00-2087.00.

If, then…
A lot of patterns are at work here, from the overnight failed surge and the plunge segment, to the Expanding Triangle and potential gap down.
The failed surge”s placement occurred at a 61.8% retracement back to yesterday”s pre-open highs, and it”s the most bearish influence, with potential for a fresh low at 2077.50.
The plunge segment”s line in the sand is 2090.75, which is both an attraction to a retest, and a signal to complete recovery.
Expanding Triangles are often reversal patterns, and exceeding its room for noise above at 2090.50 would start to signal the reversal underway, but meanwhile there is room for noise below it to 2077.50.
Gapping down but back above 2088.00-2090.00 — or not gapping down, at all — would be likely to repeat the recent pattern of isolating overnight drops.
So, rallying above 2090.00 through the open, if not already recovered above 2094.00 into the open, would keep the market on-track for probing new highs. Not yet recovering 2089.00 or failing to maintain a probe above it would make a probe under overnight lows likely.

First Trade…
Exiting the open at 9:45 above 2090.25 would be likely also to avoid triggering the 2089.00 bias-down signal at 10:15. Exiting the open under 2086.00 would be likely to trigger bias-down. Exiting the open above 2096.75 would be likely to trigger the 2095.00 bias-up signal.

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)

Through the prior close…
Monday”s gap up extended higher to touch the upper-end of its renewed bias-up target at 2095.25-2097.50. Not exceeding it through a relevant timing window prevented putting into play any higher objective. The afternoon ranged choppily back down to 2092.00. A post-close drop extended down to 2089.25.

Overnight action”s new info…
The rally”s resumption was immediate, slowing pessimistically upon attacking Monday”s highs, and then surging through them to a fresh high. That was extended to 2105.25, within 1 tick of last Wednesday”s high. Its reaction retraced 61.8% of the overnight gain back down to 2095.25, consolidating almost three hours back up to 2101.00.

If, then…
Last Wednesday”s late break was considered to be sponsored by weak hands, and it was retraced entirely Thursday. Friday”s much deeper drop was also considered to be weak-handed, and now that has been retraced entirely. Weak-handed sponsorship can produce detours, which by definition are only temporary. New highs remain likely, potentially today, if another detour doesn”t appear. Today, that vulnerability is probably limited to the open holding a test of last week”s highs, if not also falling back under yesterday”s highs

First Trade…
Exiting the open at 9:45 abov 2105.50 would be likely also to renew the bias-up signal by exceeding its 2104.00 bias-up target through 10:15. Exiting the open under 2095.25 would be unlikely to trigger the 2098.25 bias-up 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)

Through the prior close…
Responding to China”s drop, Greece”s ongoing Grexit and Bloomberg”s outage — and attracted to a retest of Thursday”s 2089.00 pre-open low — S&Ps plunged 15 points in Friday”s early morning hours. The open was greeted by a failed bounce that extended the drop another 18 points through the afternoon bias environment, totaling 34 points from Thursday”s close. The last timing window rallied 12 points to retrace almost all of the afternoon”s portion of the drop.

Overnight action”s new info…
China rallied sharply in reaction to easing bank reserve requirements. Greece may be getting $5 billion from Russia. And, Bloomberg hasn”t gone dark again. Sunday night”s open gapped up 5 points, and eventually added another 8 points to pierce 2089.00 by 3 ticks. That”s a Fibonacci 61.8% retracement back to Thursday”s high. And it is now reacting down to test 2083.00.

If, then…
Was Friday afternoon”s recovery enabled by the bullish WedEX expiration indicator? Then its influence on Monday morning should be aggressively bullish. Gapping up is irrelevant to the indicator — trending up through the opening 15 minutes of volatility would be highly reliable for trending up through the morning. By the same token, trending down through the open would invalidate the signal, if not invert it, in either case being attracted down to fill the gap back to Friday”s close.

First Trade…
Exiting the open at 9:45 above 2086.00 would be likely also to exceed the 2084.50 bias-up target through 10:15 to renew the bias-up signal. Exiting the open under 2082.00 would be less likely to exceed the bias-up target in time to renew the signal.