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…
Perhaps it was probably the afternoon”s impending FOMC Minutes release that kept Wednesday morning within a choppy 2089.00-2094.50 sideways range. If so, then the same inhibition prevented the gap down from extending. Extending down wasn”t likely, anyway — but neither the favorable knee-jerk reaction to FOMC nor its follow-up did more than probe momentarily into positive territory at 2097.00.

Overnight action”s new info…
Narrow ranging down to 2093.25 plunged ahead of Europe”s opens, probing yesterday”s low down to 2087.25. Recovering back to 2093.25 suddenly surged 6 points to 2099.50 on news that Greece officially requested a loan extension, and that the ECB saw it as a positive sign. Wait, there”s more. Germany rejected the request, triggering an even faster 9-1/2 point plunge to 2090.00. So, it”s going to be one of those days.

If, then…
The more recent plunge is a 61.8% extension of the original surge”s measurement. It”s calculable support. Not that it must hold, but it allows the reaction down to be only a temporary correction that recovers to higher highs. And, why not, since Grexit may be resolved in principle very soon. Greece seems conciliatory, ECB seems agreeable, and Germany is keeping the tit-for-tat lively. The market had better agree quickly, because the next leg down would be much bigger than 9-1/2 points. Not coincidentally, the plunge”s extremes are defined by this morning”s bias signals, and breaking one would likely trend.

First Trade…
Exiting the open at 9:45 under 2087.00 would make the 2090.75 bias-down signal likely to trigger at 10:15. Exiting the open above 2094.25 would be unlikely to trigger bias-down. Above 2096.50 would be likely at least to test the 2099.75 bias-up signal, which won”t be any likelier to trigger without also already recovering above 2101.50.

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…
Three-day weekend volatility continued settling down Tuesday, while also laying the groundwork for extending higher later — a test of the 2087.50 bias-down signal put into play an offsetting test of the 2095.75 bias-up signal at new highs. Fresh highs through the noon hour probed the objective up to 2099.50, and held up long enough to trigger the afternoon”s bias-up signal — it was left outstanding, as more groundwork for extending higher later.

Overnight action”s new info…
Tuesday afternoon had drifted to 2093.25 before a last-minute pop-up. A narrow 2-point range at 2096.00-2098.00 through the night eventually dipped to within 1 tick of 2093.25. Now the original 2-point range is being attacked from below.

If, then…
Yesterday afternoon”s 2101.50 bias-up target became “unfinished business above” that requires being tested eventually. That should be sooner, rather than later, even if only to neutralize the rally”s higher objectives so a downleg can begin. That”s a risk, since that”s the only outstanding objective, and since yesterday afternoon”s probe of fresh highs weren”t maintained. Neither was the afternoon”s probe of fresh highs rejected, so the rally remains intact, albeit vulnerable to reversing down if another fresh high isn”t maintained. Ongoing Grexit drama or reaction to this afternoon”s FOMC Minutes can produce extreme sentiment that is vulnerable to becoming a sentiment extreme. Either way, Friday”s impending expiration should become a catalyst for sudden re-positioning that exacerbates any trending into Wednesday”s close.

First Trade…
Exiting the open at 9:45 above 2103.00 would be likely also to trigger this morning”s 2100.75 bias-up signal 30 minutes later at 10:15. Exiting the open under 2088.50 would be likely also to trigger the 2089.00 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 retest of December”s highs fulfilled two requirements. It was the minimum likely resolution of the two-week old rally, while it also rewarded Thursday afternoon”s buyers for having gained traction. The afternoon”s slide to 2082.75 threatened to leave positive territory. But that only stretched the rubber band for rallying to fresh highs at 2095.00 into the weekend.

Overnight action”s new info…
Don”t blink, you”ll miss it. Sunday night”s open immediately slid 6 points. News from the Eurogroup talks kept the session under pressure through Monday morning. A late hopeful blip-up attacked Friday”s high, but its hopes were quickly dashed by contradicting headlines that triggered a plunge attacking Friday afternoon”s low. Lower lows at last night”s open probed under Friday afternoon”s low, twice. But hope springs eternal, and it sprang again soon after Europe”s opens, now attacking Friday”s high to within 2 points.

If, then…
A 7-point drop after Friday”s close was followed by a 12-point drop. And this morning”s open is indicated to open down only 2-3 points. That recovery might not hold, or it might yet extend. Overnight patterns rarely influence intraday price action, and these even less so. Sellers weren”t the strong hands that act during liquid environments. Unless bias-down is warned or triggered, we”ll assume the holiday”s round trip reinforces the rally”s intent to probe fresh highs.

First Trade…
Exiting the open at 9:45 above 2091.00 would be unlikely to trigger the 2087.50 bias-down signal 30 minutes later at 10:15. Exceeding 2097.50 through the open would be likely also to trigger the 2095.75 bias-up signal. But failing to hold 2085.50 would be likely to trigger the 2087.50 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…
Thursday”s 10-point gap up at the morning”s 2074.00 bias-up target soon extended to pierce Wednesday”s freakish post-close surge to 2079.50. The morning”s bias environment dipped back down to 2074.00, and that was the last of that. The balance of the session trended up to fresh highs, eventually touching 2085.50. And the rally gained traction for its efforts.

Overnight action”s new info…
A shallow dip to 2081.50 was already firming into midnight, and has since extended higher to 2089.75, piercing December”s prior high by 1 point.

If, then…
The range between January”s channel and December”s high has been retraced relentlessly, already producing a new high. This continues to track the template we”ve been monitoring as the likeliest resolution. That template”s own likeliest resolution is to reverse down aggressively, too, but not until after probing the prior high.. Probing prior highs should be today. Especially considering that this morning”s bias environment should be controlled by buyers to reward them for controlling yesterday afternoon. The only potential obstacle would be created by the open”s gap up expending so much energy that it attracts more sellers than buyers — since Friday morning”s bias tends to persist through the noon hour, and intraday counter-trend sponsorship is difficult enough to attract on a Friday afternoon, let alone before a three-day weekend. Don”t forget that this is the area that four consecutive sessions in December probed fresh highs intraday and yet failed to gain traction.

First Trade…
Exiting the open at 9:45 above 2088.75 would be likely also to trigger the 2087.50 bias-up signal at 10:15. Exiting the open under 2083.00 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…
Wednesday”s choppiness still managed to include an afternoon rally from 2053.25 up to 2069.75. The overall effort was very disjointed, first creating “unfinished business below” at its oversold RSIs, and ultimately neutralizing unfinished business above at the morning”s bias-up signal. The singular probe above Friday high was not complex before reacting down to 2061.00.

Overnight action”s new info…
Firming into and out of Wednesday”s futures close was apparently caused by rumors from the Eurogroup meeting of agreement to kick the can further down the road. Within minutes, it was touching 2079.50. Greece soon walked that back, and eventually negative territory was probed down to 2058.50. Having been corrected, firming again into Europe”s opens soon resumed rallying, so far reaching 2077.75.

If, then…
Yesterday”s close barely managed to form a hold-short whose bounce limit was exceeded a minute too late to disqualify the setup. Its maximum stop was triggered moments later, illustrating why the setup is not appropriate for any illiquid cash instrument. The setup illustrated something else, too — context. Greeting the news from the hold-short”s position of weakness made the knee-jerk reaction suspicious. The question now is whether already having reversed it all overnight, having probed back under the setup”s original low, allows the overnight rally to extend higher intraday uninterrupted.Other than stopping short of touching Wednesday afternoon”s oversold RSIs, the bullish template”s pattern and timing is playing out. Even the overnight selling”s measurements fit, albeit from a much higher level that avoided touching yesterday afternoon”s low.

First Trade…
Exiting the open at 9:45 above 2078.00 would be likely also to exceed the 2074.00 bias-up target through 10:15, which would renew the bias-up signal. Exiting the open under 2070.75 would be unlikely to exceed the bias-up target in time to renew the signal. But the open must be exited under 2065.50 before suggesting the 2067.75 bias-up signal won”t even trigger.