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…
Wednesday night”s slide tested Tuesday”s “lower prior highs” into the 2088.00-2090.00 range. That was also the morning”s bias-down target. The 2095.00 bias-down signal was recovered at the open, but didn”t trigger either way at 10:15 or at 10:30. Nevertheless, the balance of the session worked higher until touching the morning”s 2104.75 bias-up signal during no-bias trending.

Overnight action”s new info…
A downward drift worked its way back into yesterday”s opening range. Narrowly consolidating at 2096.00-2098.00 suddenly broke lower into a 14-point plunge attacking 2082.00. The cause is tied to Bloomberg terminals going off-line globally. With everything being down from communication (i.e. chat) among trading desks to Central Bank activities (e.g. ECB QE buying), it might as well be a weekend. And with two days of illiquidity just hours away, exposure was reduced wholesale, and the selling drove prices down sharply.

If, then…
Yesterday”s no-bias rally was the sign of weak-handed buyers, like the opening range”s optimism that prevented a healthy blip-down before rallying. That kept alive potential for another dip today if the rally wasn”t extending. This vulnerability was leveraged by Bloomberg”s outage into an extra 6 points (attacking 2082.00 where 2088.00 would have sufficed). Without rebooting soon, there”s no assurance that another wave of selling won”t hit. Holding or recovering Tuesday”s 2088.00-2090.00 “lower prior highs” through the open is my line in the sand between rallying this morning, or extending down — either way, expiration is likely to exacerbate it. All else being equal, the underlying uptrend remains intact, with Bloomberg being the wild card.

First Trade…
Exiting the open at 9:45 under 2084.00 would be unlikely to recover the 2088.00 bias-down target through 10:15 and renew the bias-down signal. Exiting the open above 2090.00 would be likely to hold the bias-down target and not renew bias-down. Exiting the open above 2095.00 would be unlikely to trigger the 2093.25 bias-down signal.

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

NOTE: EMAIL ME IF YOU”RE ENCOUNTERING DIFFICULTY ENTERING THE CHARTROOM THIS MORNING.

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

Through the prior close…
Wednesday”s gap up from 2090.00 to 2095.50 extended higher, retesting last week”s 2101.25 high. This had created plenty of room for dipping back down to 2095.50 into the morning bias environment”s exit, without damaging the uptrend”s momentum. The afternoon”s bias environment surged higher to test 2105.50. A late dip back under the morning”s high ended just under 2100.00, fulfilling the higher close that last week”s confirmed breakout had put into play. WedEX triggered passively bullish.

Overnight action”s new info…
Narrow sideways ranging up to 2102.75 began probing lower into and out of Europe”s opens. The drop has steepened and extended to probe not only yesterday”s 2095.50 lows, but to also touch the upper-end of Tuesday”s 2088.00-2090.00 “lower prior highs.”

There culprit appears to be Greece, which apparently is experiencing some sort of cash flow issue, i.e. not news.

If, then…
The sponsorship behind yesterday”s late dip was weak-handed. Extending lower overnight can prove to be weak-handed by remaining within the range. And that range”s lower-end is Tuesday”s 2088.00-2090.00 “lower prior highs” — whose upper-end has been touched. Somehow recovering enough for the post-open action not to print under yesterday”s 2095.50 low would suggest that momentum had reversed up. The longer that a bounce doesn”t recover 2095.50, the likelier it has only refueled sellers to resolve down. If the open”s gap down holds within the 2088.00-2090.00 orbit, then WedEX could become passively bearish by proxy.

First Trade…
Exiting the open at 9:45 under 2093.25 would be likely to trigger the 2095.00 bias-down signal at 10:15. Exiting the open above 2097.00 would be unlikely to trigger bias-down. Exiting the open above 2101.25 would be likely at least to test the 2104.75 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 sell-off from 2101.25  bled into Tuesday”s session, thoroughly testing the maximum 2076.00 pullback limit. Two timing windows failed to break lower, and the second window was exited in rally mode. The noon hour”s 2092.00 high was consolidated through the afternoon, perhaps inhibited ahead of post-open earnings. Buyers didn”t gain traction for their efforts.

Overnight action”s new info…
Tuesday afternoon”s consolidation bled into the overnight, trading flat-to-lower within Tuesday afternoon”s range. One hour after Europe”s opens a surge probed above Tuesday”s range to 2095.00. That has since extended to 2097.00..

If, then…
The rally was likely to resume today, and the rally”s resumption was likely to begin by gapping up. But gapping up does not ensure the rally is resuming. Already trading 5 points above yesterday”s high is testing 2097.00, important resistance that was Monday morning”s support and eventual sell signal. Post-open testing of relevant resistance requires exceeding it through that timing window”s exit, or else a reversal down would become likely — even if only as a temporary correction. It is possible to expend too much buying pressure to be sustainable, which would be “ineffectual optimism.” There is a benefit of the doubt for extending higher, but we”ll still be prepared for signs that new sponsorship isn”t being attracted. Bank of America (BAC) just announced earnings and the ECB just announced policy, neither having an effect on S&Ps. Mario Draghi”s press conference will begin soon, a centrist Fed speaker is scheduled pre-open, and a hawk is scheduled post-open. Until the bias timing window triggers at 10:15, we”ll still give dips a benefit of the doubt to be recovered.

First Trade…
Exiting the open at 9:45 above 2097.00 would be likely also to trigger the 2094.50 bias-up signal at 10:15. Exiting the open above 2103.25 would be likely also to exceed the 2100.50 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.

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 pre-open recovery probed fresh highs up to 2101.25. Bias-up triggered late at 10:30, but was never any more productive than before then. Through this small opening drove a giant truck that trended down relentlessly to the afternoon”s 2085.25 low. Perhaps the truck was only relatively giant, since demand was relatively small — the afternoon bias environment”s exit under the noon hour low wasn”t so much confirmed, as it was not rejected. Ultimately, Monday”s drop held (barely, 3 ticks) above Friday”s confirmation session low.

Overnight action”s new info…
Strong-handed selling, or not, it has extended overnight. But not before retracing all of yesterday”s final hour drop from 2092.75, into and out of Europe”s opens. The only proximate cause for its peak seems to be Asian markets” weakness. Regardless, a much steeper downleg began that fell over 13 points in 90 minutes to 2079.25. It has since bounced back above yesterday afternoon”s 2085.25 low to unchanged.

If, then…
Weak-handed sponsorship can be productive during less liquid environments. That”s why gapping open from one relevant level to the next is often reversed immediately intraday. Having tested the next lower objective at 2080.00, which is also support from last week”s “lower prior highs,” a corrective drop may be complete. Opening back above yesterday”s lows would be an important first step to ending the correction, but still not enough. A brief post-open dip that avoids triggering bias-down would be credible to building a bottom, a little more so than would immediately extending optimistically higher. And not recovering a post-open probe under yesterday”s low would likely retest the overnight low down to 2076.00.

First Trade…
Exiting the open at 9:45 under 2082.25 would be likely also to trigger the 2083.50 bias-down signal at 10:15. Exiting the open above 2089.50 would be unlikely to trigger bias-down. The opening 15 minutes must be exited above 2096.00 before improving the potential to trigger the 2091.50 bias-up 30 minutes later.

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…
Friday”s open was preceded by a blip-up to fresh highs at 2090.50 in reaction to GE”s buyback announcement. The move had complexity, trending to higher highs with its interim low holding above Thursday”s 2087.00 high. That “complexity” made the overnight high”s retest likely. Initially reacting down to 2084.50 failed to gain traction. The overnight attraction above reinstated upward momentum that became entrenched by “Friday factors” that create barriers to intraday reversals. The balance of the session trended up to 2096.00 into the close.

Overnight action”s new info…
Sunday night”s open blipped-up to 2097.75, and then began sliding. Its 2093.00 low greeted Europe”s opens, extending down to 2089.00. That was retraced to test 2093.00 as resistance, which has held as resistance for the past two hours.

If, then…
Having trended up through the prior close, gapping down under the prior afternoon”s 2091.50 bias environment low could form a “session-long decline” setup. When attempted across a weekend, this setup often fails and resolves up. Often. But sometimes they gain traction. Regardless of how it might begin, today is vulnerable to a corrective dip after Friday confirmed Thursday”s breakout.

First Trade…
Exiting the open at 9:45 under 2091.50 would be unlikely to trigger the 2098.00 bias-up signal at 10:15. Exiting the open under 2086.50 would be likely to trigger the 2088.75 bias-down signal.