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…
Despite having met and held the decline”s 2040.00 target at Friday”s low, the decline resumed Monday by gapping down. Exiting the weekend with extreme sentiment is often a sentiment extreme. So, not reversing quickly suggests that there is plenty of extreme to come. In fact, the balance of the session trended down into the final hour”s test of 2010.00. In fact, although not by decisive margins, the afternoon”s timing windows each were lower than the last — sellers gained traction for the effort.

Overnight action”s new info…
Monday”s last-hour bounce had nearly fulfilled its potential to 2020.25. Meeting it soon after the Globex open was reacted down 9 points through early-morning. Another bounce, now 90 minutes old, is probing fresh highs up to 2022.50.

If, then…
Monday”s low was a 61.8% retracement of the prior rally leg, making today vulnerable to a bounce. The first of its two 2022.50 and 2029.00 objectives has been touched. The higher target remains likelier — but not if the first objective isn”t exceeded through the open since it has been touched already.

First Trade…
Exiting the open at 9:45 above 2022.50 (and also above 2024.00 if it were touched already) would be likely also to trigger the 2023.25 bias-up signal at 10:15. Exiting the open under 2013.00 would be unlikely to trigger bias-up, and at least test the 2011.50 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…
Stocks came back from the New Year”s Day break by actually coming back from the New Year”s Eve breakdown. There wasn”t going to be anything easy about that. Gapping up 8 points from Wednesday”s ~2053.00 close and immediately extending higher another 5 points to 2066.00 still couldn”t reverse Wednesday”s last half-hour plunge. So, Friday reversed back down and extended the decline to its 2040.00 target, also fulfilling the afternoon”s 2039.00 bias-down target. Bouncing through the position-squaring window retraced 61.8% of the post-open high at 2055.50 before dropping 10 points into the close.

Overnight action”s new info…
Friday”s last-minute 10-point plunge immediately began extending down another 10 points. Room for noise under the decline”s 2040.00 target down to 2036.00 was attacked to within 2 ticks. The portion that probed under Friday”s low was a singular spike down, so it is not a “new Globex trend extreme.” Bouncing from there has twice tested 2048.00, reacting down both times to at least 2040.75 — this morning”s bias-up signal and target, respectively.

If, then…
All caught up? Seriously, the “previously on Downton Abbey” is shorter. But each of the elements listed above is pertinent to where the market is, how it got here, and what comes next. The decline”s 2040.00 target is met. Room for noise under it contained an overnight probe, without creating any requirement to be retested. Elsewhere, Crude Oil is fulfilling its 51.75 target, currencies are greeting the new week very extended with potential to invert. And a full week lies ahead. If that”s not enough to have depleted recent sponsorship and to attract counter-trend sponsorship for an aggressive rally, then this decline should be much lower soon.

First Trade…
Exiting the open at 9:45 back above 2052.50 would be unlikely to trigger the 2048.00 bias-down signal 30 minutes later at 10:15. Exiting the open above 2055.00 would be likely also to trigger the 2056.75 bias-up signal. Exiting the open under 2042.00 would be likely also to trigger the 2048.00 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…
2014 started to end with a whimper. Then came the bang, as Wednesday”s noon hour began by breaking aggressively under the morning”s ~2075.50 lows. But testing two-week old prior lows at 2068.00 provided only a temporary pause to neutralize oversold RSIs. Then it was back to work, with two more downlegs testing 2058.00 and 2051.00. RSIs diverged positively at the latter, but it was too late for counter-trend sponsorship to exploit. Sellers gained traction for their efforts.

Overnight action”s new info…
Thursday night”s open gapped up to immediately pierced the 2056.00. buy signal, which had been avoided during Wednesday”s late consolidation. The rally extended into Europe”s opens, probing this morning”s bias-up target by  point up to 2067.00, and then retesting it while RSIs diverged negatively. Its reaction down has tested and retested 2058.00, still well into positive territory, and supported by this morning”s 2059.25 bias-up signal.

If, then…
A lot of buying pressure has been expended overnight, but it has already been well rewarded. Resuming the overnight recovery is difficult when the 2066.00 bias-up target not only has been met, but also has been so influential. If this morning”s action isn”t rejecting and retracing more of Wednesday”s drop, then it is likely extending it to lower lows.

First Trade…
Exiting the open at 9:45 above 2064.00 would be likely also to exceed the 2066.00 bias-up target at 10:15 to renew the bias-up signal. Opening back under 2056.00 would be unlikely to trigger the 2059.25 bias-up signal. And not even holding above 2053.50 through 9:45 would be likely to trigger the 2050.00 bias-down signal at 10:15.

Enter the Chartroom here (pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Gapping down Tuesday remained under pressure throughout the day. But it held a test of lower prior highs at 2073.00. And no unfinished business below like oversold RSIs was left outstanding.

Overnight action”s new info…
Rallying ahead of Europe”s opens extended to test 2082/50. But a dip since then is testing 2079.50.

If, then…
Gapping up above yesterday”s 2083.00. opening high would break free from yesterday”s downtrend. The balance of the session might be dull, but the downside would be moot. Not extending through 2083.00 would still be capable of resolving down to new lows through the morning. Regardless, not yet breaking beyond either end of yesterday”s range could prevent trending for the day.

First Trade…
Exiting the open at 9:45 above 2083.00 would be likely also to trigger the 2082.00 bias-up signal at 10:15. Exiting the open under 2074.75 could still trigger the 2073.00 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 open avoided testing overnight lows down to 2076.00, and surged from the morning”s 2081.50 bias-down signal. Before an offsetting test of the 2088.00 bias-up signal could be put into play, it was already tested. Its resistance held through the bias environment”s narrow range of less than 3 points. But for a noon hour dip to 2084.50, the afternoon ranged as narrowly.

Overnight action”s new info…
Firming back up to 2088.00 was resisted no less than Friday or Monday. A 9-point drop down to 2078.75 began at midnight and extended through Europe”s opening hour. Consolidating since then just surged to 2083.00.

If, then…
Still being in the same range as Friday”s potentially bearish setup, trending down through the open would be vulnerable to extending down sharply. Being one day away from Wednesday afternoon”s volume evaporation, there probably isn”t any time remaining for any other bearish setup. Another “buy the opening dip” setup isn”t likely one day following the last — but I”ll get very bullish if it seems to be.

First Trade…
Exiting the open at 9:45 under 2078.50 would be likely also to trigger the 2082.50 bias-down signal at 10:15. Exiting the open above 2084.00 would be unlikely to trigger bias-down.