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)

REMINDER: TRAINING SESSION
— tonight at 6:15 ET —

Through the prior close…
“Ineffectual optimism” delayed Wednesday”s open from touching Tuesday”s 2056.25 low any closer than 3 ticks. Then it limited the retest of Tuesday”s low to momentarily piercing it by 1 point. But it finally succumbed to probing under Tuesday”s low by 4 points. That neutralized sellers just in time for a very favorable reaction to the FOMC events, surging to within 1 tick of 2100.00. Reacting down to 2088.50 left outstanding overbought RSIs at the high.

Overnight action”s new info…
A similar pattern to Tuesday night worked its way back to within 2 ticks of Wednesday”s high at 2099.00, and then slid nearly 13 points to 2086.25. 

If, then…
Post-FOMC reactions tend to be retraced entirely within one week. Probing fresh highs through this morning”s open would all but ensure that path includes a new high. Following the path to new highs would likely develop quickly, if at all. Influence from this week”s impending expiration probably exacerbated yesterday”s FOMC reaction. Slowing that reaction would suggest its influence had lapsed altogether.

First Trade…
Exiting the open at 9:45 above 2100.00 would be likely also to trigger the 2097.75 bias-up signal 30 minutes later at 10:15. Exiting the open under 2085.00 would be likely to trigger the 2087.75 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…
Tuesday”s gap down under Monday afternoon”s low had triggered a “session-long decline.” Every timing with one exception was likely to probe under the prior timing window”s low, which the morning fulfilled down to 2056.25. But following the noon hour”s likely exception, no other timing probed lower. However, probes above both bias-up signals up to 2070.50 were delayed or rejected before being able to gain upside traction that could invert or invalidate the session-long decline signal. A late dip through the close fell to 2064.00.

Overnight action”s new info…
Continually firming through the night eventually touched 2070.00, but that was the end of that. The three hours since then have slid relentlessly. Yesterday”s low was attacked to within 3 ticks at 2057.00. My expectations for a wild afternoon are being validated.

If, then…
Invalidating yesterday”s session-long decline setup would have made probing under yesterday”s low unlikely. Not invalidating it allowed fresh lows to remain possible, but still not required. The setup”s most relevant influence is its context, which gapping up today would have killed. The open is still some time off, but gapping down to yesterday”s low is currently indicated, so the question is whether this morning will compensate for the delay in fulfilling yesterday”s bearish signal. Gapping down might avoid extending lower as volatility becomes paralyzed by anxiousness ahead of this afternoon”s FOMC events. But unless the open is already the drop is credible for extending to 2053.25-2054.00 or to 2048.00-2048.75 before paralysis sets in.

First Trade…
Exiting the open at 9:45 back above 2063.50-2064.50 would be unlikely to trigger the 2060.25 bias-down signal 30 minutes later at 10:15. Exiting the open under 2058.25 would be likely to trigger bias-down.

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 rally was good to the last drop. Its gap up to 2054.00 extended higher quickly to remove any concern that its extreme sentiment would become a sentiment extreme. Gapping up to Thursday”s close immediately retraced Friday”s decline, which had developed despite Thursday”s “session-long rally” setup having gained traction. The open fulfilled its 2066.00 target, and the morning”s high 2069.25 essentially fuflilled the leg”s 2070.00 area target. Extending higher into the final hour touched 2073.50 resistance, and a last-minute blip-up stopped 3 ticks short of 2074.75 resistance into the cash session close. Only then did price plunge to 2067.50 through the futures close.

Overnight action”s new info…
Sliding into the futures close was extended down through the Globex open to 2064.75. A 3-point high range was probed temporarily up to 2070.00. Its reaction back into the overnight range extended through it to fresh lows at 2060.75.

If, then…
Will Monday”s rally fall victim to its own success? Every upleg met its target, fulfilling that much more buying pressure. The rally still gained traction for its effort by exiting the bias environment at 2:30 above the noon hour”s high and by entering the final hour even higher. Is Tuesday”s session about to ignore that, like Friday”s drop ignored the traction Thursday gained. That”s what last night”s slide is threatening. But gapping down, alone, won”t be bearish — not if yesterday afternoon”s 2065.25 low is recovered through the open. It”s being probed now.. Triggering bias-down 30-45 minutes later could trend back down through the morning, returning to Friday”s lows.

First Trade…
Exiting the open at 9:45 above 2068.50 would be unlikely to trigger the 2067.00 bias-down signal 30 minutes later at 10:15. (Holding a test of the bias-down signal through 10:15 would then put into play an offsetting test of the bias-up signal). Exiting the open under 2061.25 would be likely also to exceed the 2060.25 bias-down target through 10:15. (Exceeding the bias-down target would renew the bias-down signal, putting into play a lower bias-down target.)

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 ignored the traction gained by Thursday”s session-long rally. The open gapped down a couple of points to 2055.00 and then trended down through the morning to 2032.50. The noon hour”s bounce to 2042.00 was retraced back down to the low, and bounced back up to the noon hour”s high — typical Friday afternoon ranging. A late break higher to 2048.25 was retraced back down to the noon hour”s 2042.00 high.

Overnight action”s new info…
Friday”s late failed breakout was retraced another 5 points through Sunday night”s open to attack 2037.00. The balance of the night has rallied. Consolidating just under Friday”s late high into and out of Europe”s opens, eventually launched a breakout up to 2052.50. It has since served as resistance, while this morning”s 2049.00 bias-up signal has been serving as support.

If, then…
The overnight rally got within 4 points of Thursday”s close. Gapping up above it, and also above the 2055.25 bias-up target, would all but negate any near-term bearish consequences of Friday”s session. But remember that greeting the new week with extreme sentiment often proves to be a sentiment extreme, so not extending higher from the gap up would reinforce Friday”s bearish consequences.

First Trade…
Exiting the open at 9:45 above 2053.00 would be likely also to trigger the 2049.00 bias-up signal 30 minutes later at 10:15.Exiting the open back under 2045.75 would be unlikely to trigger the 2049.00 bias-up 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…
Gapping up to and through Wednesday afternoon”s 2041.00 high triggered a “session-long rally” setup by rejecting Wednesday”s sell-off to 2030.50. The open”s surge to 2051.50 was probed before noon. The last hour”s surge extended again to test 2059.00. And buyers gained traction for their efforts, exiting the bias environment above the noon hour”s high, and entering the final hour even higher.

Overnight action”s new info…
After a dip attacked 2055.00, fresh highs were probed up to 2061.25. Choppy ranging tested it again. But despite recovering from another dip that attacked 2055.00, a very steep 90-minute drop is now testing yesterday morning”s 2051.00 high as support.

If, then…
The successful “session-long rally” setup tends to trend higher through the next morning. This would appear to be doing the opposite, but it looks worse than it is, so far. This pre-open drop hasn”t yet done any damage that can”t be rejected and recovered by the open. Even though the market is down 6-7 points from yesterday”s cash session close, it”s still supported by “lower prior highs” from intraday yesterday. In other words, its trend hasn”t reversed down. The rest is just an optical illusion — the drop looks bigger on the chart because being very recent it is very steep, and because it fresh highs had been probed overnight. And 2051.50 which is being tested now is relevant support, being this morning”s bias-down signal. Regardless of the opening print, potential to probe fresh highs this morning remains alive unless rejected by the opening 15 minutes of volatility.

First Trade…
Exiting the open at 9:45 under 2049.25 would be likely also to trigger the 2051.50 bias-down signal 30 minutes later at 10:15. Exiting the open above 2055.75 would be unlikely to trigger bias-down. The 2060.00 bias-up signal won”t be any likelier to trigger until also exiting the open above 2063.00.