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…
Exiting Tuesday morning”s bias environment back within the open”s 2021.50-2029.75 range had suggested the morning”s probe under Sunday night”s low down to 2013.25 was absorbed. Exiting the noon hour above the open”s range had suggested the recovery was gaining traction. Despite having extended to 2037.00, closing action dropped to within 2 ticks of the opening range”s 2021.50 lower end. The cash session closed at 2023.00.

Overnight action”s new info…
Tuesday”s late drop began recovering into the futures close up to 2031.25, and out of it up to a fresh high at 2039.00. Despite extending sharply higher well before midnight to 2046.50, a 12-point slide to 2028.50 has erased yesterday”s overnight gains to test the upper-end of yesterday”s 2021.50-2029.75 opening range. Another rally effort is nnow back up to 2038.00.

If, then…
Yesterday”s post-close Market Wrap identified 2041.00 as signaling a bullish session today. That probably seemed a little silly, even while yesterday”s futures close was extending 8 points above the 2023.00 cash session close. The preferable bullish open above 2044.00 must have seemed even further-fetched. Well, the more things change, the more they remain the same: Both levels looked tame when they were being probed by midnight, but yesterday”s 2031.25 has been retraced — and then some, almost 3 points lower. Regardless, the cash session close is still substantially lower, and it is more relevant than the futures close. So long as that holds, at least a morning rally is likely before anxiousness can paralyze price action ahead of this afternoon”s FOMC news.

First Trade…
Exiting the open at 9:45 under 2032.25 would become less likely to trigger the 2030.50 bias-up at 10:15. Exiting the open above 2041.00 would be likely to exceed the 2037.25 bias-up target at 10:15 to renew the 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 recovery didn”t gain traction for its effort, despite trending higher through the afternoon, and despite a late 10-point surge. The uptrend”s interim reactions down to higher lows had each prevented greeting key timing windows at a higher high. The late surge originated too late to be relevant, and probed a fresh high only after the cash session close. Additionally, its pre-close and post-close highs each coincided with resistance — 2050.50 the afternoon”s bias-up target, and 2055.00 had defined Friday”s intraday resistance. Oversold RSIs were left outstanding at Monday”s 2034.50 opening low.

Overnight action”s new info…
Having expended unavailable energy through Monday”s close, an overnight pullback became likely. Sideways ranging between 2052.00-2054.00 had already broken lower 3-5 points into Europe”s opens. A blip-up into the range was reversed as quickly, and much more substantially, just now touching 2040.00.

If, then…
Yesterday”s close surged to fresh highs despite the afternoon failing to gain traction. This was the basis for my warning Market Wrap warning about a likely overnight pullback. My likely objective was 2044.00, with potential to 2041.00. The lower objective as met only momentarily by a knee-jerk reaction to PG missing earnings, and perhaps also from MSFT gapping down under yesterday”s after hours dip. The overnight drop has probably extended too deep and too late for a recovery to gap up, so rallying this morning will depend on opening too low to attract new sellers. A lot of econ reports are on their way, which are likely to be a catalyst for more volatility. The overnight drop remains vulnerable to extending so long as 2044.00 isn”t recovered.

First Trade…
Exiting the open at 9:45 under 2041.00 would be likely also trigger the 2044.00 bias-down signal  at 10:15. Exiting the open above 2046.00 would be unlikely 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…
Friday”s opening dip held tests of the 2049.25 bias-down signal. Its offsetting test of the 2061.50 bias-up signal became unfinished business above, while choppy narrow ranging defined most of the session. The afternoon bias environment”s retest of 2057.00 reversed down through Pivotal Uptrending support that had formed. Its minimum objective of 2046.25 was probed by 4 points through the futures close.

Overnight action”s new info…
Reaction to Greece”s elections triggered an 8-point gap down that extended to 18 points at 2025.50. But the 2030.00 area held tests as support, eventually recovering to attack Friday”s post-close 2042.25 low. Its first approach missed by 1 tick, but it has now been pierced.

If, then…
Friday”s selling, and now last night”s have likely been a combination of two or three factors: Fulfilling the 2059.00 target Thursday, defensive posturing ahead of Greece”s elections, and now a reaction to their result. A lot of buying pressure has been expended overnight, but still remains well under Friday”s cash session close. That margin must be reversed entirely before the open to prevent the intraday crowd from reacting to Greece”s elections, too. Otherwise, a bullish morning would depend on the open gapping down nearer the overnight lows. Often, greeting the new week with extreme sentiment is often a sentiment extreme.

First Trade…
Exiting the open at 9:45 under 2039.25 would be likely also to trigger the 2040.75 bias-down signal at 10:15. Exiting the open above 2048.25 would be somewhat likelier to trigger the 2050.50 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…
Thursday”s pre-open surge from the ECB QE had largely round-tripped during the morning. Sideways ranging through the afternoon bias environment was resisted by the untriggered 2043.50 bias-up signal. The timing window”s exit broke higher and rallied sharply into the final hour until touching its 2059.00 target. The balance of the hour ranged narrowly again.

Overnight action”s new info…
Even narrow ranging persisted overnight, albeit at a slightly lower level between 2053.00-2055.00. Firming into Europe”s opens became a surge to fresh highs at 2062.00. Its reaction down to 2055.00 has bounce back up to 2059.00.

If, then…
Yesterday afternoon”s rally gained traction for its efforts, so its buyers should be rewarded with control of this morning”s bias environment. Losing traction before the open would forfeit the reward. A pullback still has room down to 2047.50-2048.75 before even threatening the upward momentum. A lot of optimism is expended in avoiding a last hour pullback and again overnight. Probing fresh highs this morning would expend even more optimism, and be vulnerable to reversing down into the weekend. Until triggering bias-up above 2061.50 — which is the room for noise above 2059.00, and which held the overnight surge — I would be cautious about the morning”s upside.

First Trade…
Exiting the open at 9:45 above 2059.75 would be less likely to trigger the 2049.25 bias-down signal at 10:15. Exiting the open under 2047.50 would be likelier to trigger bias-down. The open must be exited above 2065.25 to be likelier to trigger the 2061.50 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…
Wednesday morning had recovered from gapping down to test 2005.25, and then trended back above Tuesday”s 2026.50 high to 2032.75 — rewarding Tuesday afternoon”s rally for having gained traction. With that obligation fulfilled, and with ECB news ahead of it, the morning”s optimism needed to be kept in-check. So, the balance of the session marked time, dipping to 2016.25 and then bouncing back up to 2028.25.

Overnight action”s new info…
Wednesday”s last bounce eventually extended higher to another fresh high at 2035.75. ECB news still lies ahead, so the optimism was kept in-check by dipping back down to test Wednesday”s 2028.25 late bounce high. That has bounced to retest yesterday”s 2032.75 high into the ECB interest rate news (but not yet the QE details).

If, then…
Yesterday”s price action behaved appropriately for a favorable reaction to this morning”s news, greeting it with retrained upward momentum. A favorable reaction could extend through multiple timing windows, but could. Regardless of whether it fails today, a favorable reaction should be very productive. A negative reaction should be both durable and productive.

First Trade…
I”ll update this following the QE details.