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”s modest gap down probed under the overnight slide down to 2108.75, but didn”t extend it, essentially requiring a retest of Tuesday afternoon”s 2115.75 high. Since Tuesday afternoon”s high had been flawed by failing to hold above the morning”s 2114.25 high, it would be doomed to failure of some sort. In fact, despite probing new highs up to 2117.75, the afternoon”s bias environment was exited back in the noon hour”s 2112.75-2114.75 range, and the final hour was entered below it. The morning”s low was retested down to 2107.25, bouncing to 2112.50 ahead of the close. Overbought RSIs were left outstanding at the high.

Overnight action”s new info…
Firming to within 1 tick of yesterday”s 2114.75 noon hour high was suddenly reversed back down to within 1 tick of the Globex open”s 2109.75 low. The reversal was retraced entirely, back into a 3-hour 2112.75-2114.75 range that just tried breaking 1 point lower.

If, then…
Yesterday afternoon”s plunge has been retraced back to yesterday”s noon hour high, where we expected this morning”s open to print. Of course, the open is another two hours away, with much news coming before then. A retest of yesterday”s high remains likely today so long as the open isn”t reversing yesterday”s late bounce.

First Trade…
Exiting the open at 9:45 above 2117.25 would be likely to trigger the 2115.00 bias-up signal at 10:15. Exiting the open above 2112.75 would be unlikely to trigger the 2106.25 bias-down signal. Bias-down would likely trigger if the open were exited under 2104.25.

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 open had initially been resisted by its 2108.50 bias-up signal, which was also the prior high. Breaking above it before the first hour ended was rewarded by a new high testing the morning”s 2114.00 bias-up target. After the noon hour”s momentary probe back under prior highs, the afternoon”s higher high at 2115.25 fulfilled the session”s highest calculable target. The rally didn”t gain traction despite spending so much time probing new highs, because the close had dipped to overlap the morning”s high.

Overnight action”s new info…
Tuesday”s closing dip continued dipping, most recently touching 2110.00 amid Germany-second-guessing-Greece headlines.

If, then…
Most or all relevant time Tuesday was spent above prior highs, without gaining traction for the effort. This was the current rally leg”s first instance of these conditions. If they were more pronounced without any intraday dip under prior highs, a reversal down would be imminent. Instead, a second occurrence of these conditions within 2-3 days is still needed. Interim trending should be muted, or else a much bigger rally leg would actually be underway.

First Trade…
Exiting the open at 9:45 under 2104.25 would be likely also to trigger the 2107.25 bias-down signal at 10:15. Exiting the open under 2109.00 would at least be unlikely to recover in time 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 fifth consecutive gap down triggered the bias-down signal for the second time, but without already having fulfilled its target like Friday had. That still didn”t suffice for sellers to take control, as the signal was invalidated by exiting the bias environment above the open”s high. Despite having absorbed sellers, buyers never left negative territory — not until the last half-hour”s surge back to Friday”s 2108.50 high. The surge reversed yet another probe under 2101.50 support which I was expecting to drop by as much. Oversold RSIs were left outstanding.

Overnight action”s new info…
Monday”s choppy 7-8 point session was relatively narrow compared to Friday”s 26-point range. Last night”s 3-point range was narrower. Both share the same high, 1 tick short of Friday”s highs.

If, then…
“Ineffectual pessimism”? Hovering at the highs without either probing above them or reacting down eventually makes higher highs obligatory. That is, buyers must be rewarded for their effort. But that reward isn”t necessary substantial or durable, not unless another dip were to develop first. The anti-Grexit headlines have taken the lead from yesterday”s worrisome delay in Greece”s announced reforms.” The new source of anxiousness is FOMC Chair Yellen”s Senate testimony, whose remarks are normally embargoed until 10:00am.

First Trade…
Exiting the open at 9:45 above 2111.00 would make the 2108.50 bias-up signal likely to trigger at 10:15. Exiting the open under 2104.25 would be unlikely to trigger bias-up, and under 2101.50 would be likely to trigger the 2102.50 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…
Friday morning”s dueling Grexit headlines (deal/no-deal) stopped influencing price action, word of a delay did then drive the market down. Through the open. Its fourth consecutive gap down was the first not to hold a test of the bias-down signal, and instead held a test of the bias-down target down to 2082.50. Apparently, that finally stretched the rubber band sufficiently, since the balance of the session rallied to 2108.50 as an accord between the Eurogroup and Greece was reached. Expiration and the Friday Factor helped. The last outstanding upside target at 2101.50 was neutralized, while creating a new objective with overbought RSIs into the final hour.

Overnight action”s new info…
Goodbye, 26-point rally. Hello, 6-tick trading range. Price began trending down under 2106.00 ahead of Europe”s opens, slowing and consolidating within a couple of ticks of 2101.50 support. Its momentary touch has reacted up to attack 2104.00.

If, then…
Is Greece still there? I mean that figuratively, although someone in the vicinity might want to check for a pulse. Perhaps their seeming non-existence is just an illusion created by the sudden relative quiet, compared to last week”s headline saturation. The quiet can facilitate a gap down, but it”s currently too shallow to prevent retesting Friday”s high.

First Trade…
Exiting the open at 9:45 under 2101.50 would be likely also to trigger this morning”s 2103.25 bias-down signal at 10:15. Exiting the open above 2107.00 would be unlikely to trigger bias-down, and exiting the open above 2108.50 would be likely to trigger the 2109.50 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…
Thursday”s third consecutive lower open around 2089.50-2091.50 held its bias-down signal to put into play an offsetting test of the morning”s bias-up signal, which was fulfilled by rallying 12 points into noon. The noon hour”s drop ended the wide range, but the balance of the session was still choppy. The same relevant 2094.25-2095.50 area essentially defined the third consecutive session”s close.

Overnight action”s new info…
Drifting back down to 2092.50 bottomed into Europe”s opens. Firming to 2096.75 was soon explained by an anti-Grexit headline (Greece accepts most of the terms) whose reaction surged to 2098.50. It was corrected by pro-Grexit news (ECB preparing for Grexit) that retraced the surge and much of the firming down to 2094.00. Another pro-Grexit headline that soon followed (German-led bloc willing to accept Grexit) didn”t produce a fresh low. Only a much later delayed-deal headline triggered a break back to the 2092.50 overnight low, and than several ticks lower.

If, then…
Thursday”s lower open was a reaction to a pre-open surge, whose catalyst was  an anti-Grexit headline. Its reaction”s catalyst was the requisite pro-Grexit headline. History repeats. Most opportunities are produced by the pattern repeating, and other opportunities arise when the pattern doesn”t repeat. Did the latter just happen? Reaction to the last headline (Germany: “Grexit, meh”) was relatively subdued and contained for awhile. The current fresh low”s catalyst spoke to a deal”s timing, and was neither pro nor anti-Grexit. If that”s at all predictive, then expiration”s opening bias can be up. Regardless, don”t forget there is no WedEX bias, only one item of “unfinished business above,” and a fast-approaching weekend of illiquidity. The template of probing fresh highs can branch more easily into rejecting fresh highs if fresh highs are probed early.

First Trade…
Exiting the open at 9:45 above 2098.00 would be likely also to test the 2099.75 bias-up signal. Exiting the open above 2101.50 would be likely also trigger the bias-up signal at 10:15. Exiting the open under 2089.00 would make the 2090.75 bias-down signal likelier to trigger.