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…
Flat-to-higher ranging through the holiday had only fattened up the market for Tuesday morning”s slaughter. But sellers were done by noon. First, the open rejected both bias-up parameters and put into play both bias-down parameters. They were fulfilled by the morning”s 26-point post-open plunge, on the way back to Friday afternoon”s low. The balance of the session rallied, stopping pessimistically short of touching resistance. The afternoon rally gained traction for its effort, exiting the bias environment above the noon hour”s high and entering the final hour even higher.

Overnight action”s new info…
Dipping from yesterday”s 2016.75 close to attack 2013.00 reacted up to 2021.50, perhaps inspired by China”s market surge. Perhaps. China”s plunge three days ago had only a temporary impact. Similar to that delay, another dip has probed lower to 2008.00. This is the origin of yesterday”s last 30-minute 12-point surge,

If, then…
Having gained traction, yesterday”s rally is owed the reward of probing higher highs this morning. This reward would be invalidated by gapping down under a relevant low. That would become likely if this overnight drop isn”t contained pretty much here and now. Not containing it would be likely to retest yesterday”s lows, which this stage of the pattern would be unlikely to prevent extending down to last week”s lows.

First Trade…
Exiting the open at 9:45 under 2007.50 would be likely also to trigger the 2009.50 bias-down signal at 10:15. Exiting the open above 2014.00 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 expiration had recovered from probing fresh lows overnight down to 1970.00. Extending the recovery wasn”t embraced initially, but a rally eventually got underway to test 2005.00. Friday”s late-afternoon surge tested 2014.00.

Overnight action”s new info…
Sunday night soon extended that nearly 10 points to attack 2024.00. Crashing China stocks were the catalyst for a pullback to Monday morning”s 2003.00 low. That has now been recovered entirely to test and retest 2024.00 by 3 ticks.

If, then…
WedEX”s bearish influence might have been responsible for how late Friday afternoon”s ranging finally broke higher, but that has since extended. Friday afternoon”s ranging formed a Symmetrical Triangle whose breakout might be false, and preparing to reverse down more substantially — exceeding Sunday night”s highs through this morning”s open would avoid that. Extreme optimism is being tested now, with MS just moments ago joining last week”s earnings misses by BAC, JPM and GS. Of course, the previous misses helped to cushion the MS reaction, and now the biggest investment banks” earnings are all history.

First Trade…
Exiting the open at 9:45 back under 2018.75 would be unlikely to exceed the 2022.75 bias-up target through 10:15, which would avoid renewing the bias-up signal. Back under 2012.25 would be unlikely to trigger the 2016.50 bias-up signal, putting into play tests of both bias-down parameters. 

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 bias environment exit was within the noon hour”s range, so entering the final hour higher or lower wasn”t going to give anybody was gaining traction for their efforts. In fact, a break above 1994.00 probed its minimum 1997.00 objective to attack its maximum 1998.75 potential. Any higher would have been bullish through the close. Having expended all but 2 ticks of available buying pressure without gaining traction for the effort, the balance of the session trended back down to the lows at 1984.75. Futures got volatile into their close, surging 8 points and then cutting that in half.

Overnight action”s new info…
Get down, and stay down, apparently… Thursday”s post-close swing helped to extend the late dive as the drop extended relentlessly and deeply down to 1970.25. It was all retraced into and out of Europe”s opens. But 1988.75 reacted back down to almost 1973.00. Another recovery to 1988.00 has reacted down to almost 1976.00. Having retraced new highs to back under prior lows, last night formed a “new Globex trend extreme” that will require intraday retest eventually.

If, then…
First, the bullish scenario: Opening above yesterday”s lows and above the overnight range would shift the paradigm into reversal mode. It”s a perfect storm of expiration trending, its last-minute twist on position jockeying, and the impending illiquidity of a three-day holiday weekend, a substantial rally would be underway. We”d still assume a bearish WedEX influences the afternoon — although WedEX could invert to bullish by exiting the morning”s bias environment above Wednesday”s 2005.00-2008.00 close… Sadly, now, the bearish scenario: Overnight lows are an attraction, and not gapping up above a prior high would put them into play. Also, greeting a weekend with only gradually lower and lower new relative lows can discover a lot of bottom-fishers and knife catchers suddenly trying to fit through the exit.

First Trade…
Exiting the open at 9:45 above 1984.50 would be less likely to trigger the 1983.00 bias-down signal at 10:15. Exiting the open under 1974.75 would be likely also to extend under the 1977.25 bias-down target at 10:15 to renew the bias-down signal, having potential for extending down to 1958.00 and 1955.00. And then 18 or 30 points lower.

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 close had only attacked the afternoon short-squeeze”s minimum objective above 2007.00. Buyers nevertheless gained traction by exiting the bias environment above the noon hour”s high, joined by the 3:10-3:20 window trending to fresh session highs. Oversold RSIs at the session”s 1981.25 low were left outstanding.

Overnight action”s new info…
Wild swings are stepping it up. First, post-close action quickly fulfilled 2007.00”s probe, up to its likely target of piercing 2010.00. Ranging narrowly there through midnight surged to test 2027.00. Then half of the post-close 10-point gain was retraced into Europe”s opens, and a consolidation resolved down by plunging to 1986.00 (Swiss Franc cap removed). A 25-point reaction up has been retraced and recovered again.

If, then…
The players have changed, but the game remains the same. Overnight developments are reminiscent of the October 1987 decision to stop defending the Dollar vs. Mark,  triggering the Black Monday crash. Last night”s Swiss decision shocked the market, which was in the process of rewarding Wednesday”s buyers for their efforts. A lot. None of which matters if Thursday”s open maintains a gap under yesterday afternoon”s prior relative lows. If the open has absorbed and recovered from the overnight dip, then new highs probably wouldn”t be far behind. The trend is otherwise down.

First Trade…
Exiting the open at 9:45 above 2003.25-2004.00 would be unlikely to trigger the 1998.50 bias-down signal at 10:15. Exiting the open above 2007.00 would be likely at least to test the 2010.25 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…
Rejecting Tuesday morning”s rally to attack 2052.00 (which was last week”s corrective bounce potential, and already rejected) was reversed sharply down to 2001.00. Probing under Monday”s 2015.25 low throughout the afternoon”s bias environment didn”t prevent the close from still overlapping 2015.25 — neither recovering it nor rejecting it. A late bounce did peak at its 2022.00-2023.00 bounce potential to fulfill that buying pressure. And simultaneously oversold 1-minute and 3-minute RSIs were left outstanding at the low, requiring its eventual retest.

Overnight action”s new info…
Narrow ranging at 2015.25 soon gave way, and yesterday”s lows were probed down to 1996.25. All of the overnight drop has been retraced back up to 2019.50. Reacting down from there is testing 2004.00 against the background of JPM”s earnings miss.

If, then…
Retracing the overnight drop is interesting, since the drop neutralized the attraction to yesterday”s oversold RSIs, while also probing fresh lows. But not converting that into a favorable open trending even higher probably won”t avoid dipping again intraday. And gapping down to and/or through yesterday”s lows could ensure the intraday dip won”t recover.

First Trade…
Exiting the open at 9:45 under 2002.00 would be likely to renew the bias-down signal by also failing to recover the 2004.00 bias-down target at 10:15. Exiting the open above 2014.00 would be unlikely to trigger the 2009.25 bias-down signal.