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…
Rallying sharply overnight led to a choppy wide-ranging morning. But sellers were absorbed and overnight highs were recovered. That recovery extended higher into the afternoon”s bias environment. Further improvement was delayed too long to gain traction, but then the last half-hour surged 10 points into the 2056.00 cash session close equivalent, and another 5 points into the futures close.

Overnight action”s new info…
A shallow consolidation down to 2058.50 broke higher before midnight and extended almost to 2074.00. Reacting down since then has dipped to 2062.00, now bouncing back up to the 2065.25 bias-up target”s resistance

If, then…
Maintaining a gap up through resistance is the only way for a rally to extend higher after failing to gain traction the prior day. Emphasis on maintaining the gap up. Meanwhile, gapping up on expiration is unusually vulnerable to reversing down. The opening 15 minutes of volatility could define the entire session. That”s in addition to the passively bullish WedEX possibly inverting after having shifted the paradigm another 180 degrees since Wednesday.

First Trade…
Exiting the open at 9:45 above 2068.00 would be likely also to renew the bias-up signal by exceeding its 2065.25 bias-up target through 10:15. Exiting the open under 2056.50 would be unlikely to trigger the 2059.50 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…
This week”s correction into the FOMC events had been delayed by absorbing a couple of rogue downlegs that wanted to retest the decline”s 2069.00 objective. So, the template shifted forward to become a correction into and also out of FOMC. The minimum target of probing fresh session highs at 2009.50-2012.00 was mostly fulfilled up to 2011.00 after the knee-jerk selling had run its course during Yellen”s Q&A. But it stopped pessimistically short of neutralizing the attraction to overbought RSIs at Tuesday”s high just 1 tick higher. And being an inside day, the bullish WedEX signal had to be labeled “passive.”

Overnight action”s new info…
Pessimism is potentially bullish from a contrarian perspective. Yesterday”s last-minute pessimism has been that, and more… Narrow ranging finally broke higher one hour before Europe”s opens, fulfilling the correction”s next higher objective at 2020.00. Its reaction down resumed the rally soon after Europe”s opens, already probing 6 points above the correction”s likelier 2030.00 objective — which  is now serving as support.

If, then…
Gapping up so strongly today won”t make this upleg any likelier to extend higher durably. But it might allow reconsidering whether it is only a temporary correction. A lot of room has been created to absorb selling pressure before it can damage the recovery effort. But gapping up — and by so much — does create a vulnerability to reversing back down this morning.

First Trade…
Today”s bias parameters are far below this morning”s indicated open. Nevertheless, exiting the open at 9:45 under 2023.00 would threaten not to maintain recovery above this morning”s 2018.25 bias-up target through 10:15, which wouldn”t 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…
Tuesday morning”s recovery reacted down 31 points, retracing 61.8% of the rally from overnight lows. The drop began as the morning”s bias environment began lapsing at 11:30 and ended when the afternoon”s bias environment was confirmed at 1:30. The balance of the session would have been content and justified simply to range sideways, but another downleg developed to fresh post-open lows. The second downleg also measured 31 points from its origin. Overbought RSIs were left outstanding at the morning”s high.

Overnight action”s new info…
Post-close news that the ESFS had been downgraded slightly sent price down deeper. But only a little, and only temporarily. Overnight action has otherwise trended back up 12 points to 1979.00. That is a 2 ticks pessimistically short of touching yesterday”s first reaction down from the morning”s high. In fact, its reaction down to 1972.50 has now recovered almost entirely.

If, then…
If the correction template is still on-track into today”s FOMC events, then the open should already have retraced much more of yesterday afternoon”s second downleg. Retracing all of it before the open could even form a “session-long rally” setup. That can cut either way, especially after yesterday morning”s buyers got ahead of themselves — forming the session-long rally setup but not triggering it could invert into a session-long decline.

First Trade…
Exiting the open at 9:45 above 1982.00 and especially above 1985.75 would be likely also to trigger the 1982.50 bias-up signal at 10:15. Exiting the open under 1969.00 would be unlikely to trigger bias-up, and more likely at least to test the 1963.50 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…
Monday”s sellers were isolated to the morning”s bias environment. The bias timing window (first 45 minutes) had reversed down from testing both bias-up parameters up to 2012.50, putting into play tests of both bias-down parameters down to 1984.00. After meeting both lower objectives, almost every remaining moment of the morning was spent probing even lower. Substantially lower to 1974.50. But then the selling stopped magically at noon, with the entire afternoon ranging sideways, resisted by Friday”s 1995.25 cash session close. Sellers did not gain new traction for their efforts — meaning that their earlier efforts were fully satisfied — but buyers didn”t gain traction, either.

Overnight action”s new info…
Sideways ranging persisted all night and into the early morning hours, ignoring the positives and/or negatives of poor economic data from China. Then it seems the Ruble has become a factor. Probing a fresh high at 1994.00 two hours ago was reversed back into the range, and then suddenly through its lower-end, extending down sharply to this morning”s 1972.50 bias-down target. Its consolidation suddenly broke lower to 1961.50, and reacted back up to 1972.50.

If, then…
To coin a phrase: “An isolated sell-off here, and an isolated sell-off there, and pretty soon we”re talking about a real sell-off.” The decline”s next lower objective was essentially 1969.00. The 1972.50 bias-down target is the beginning of noise above it. The room for noise below is 1967.25 — if not also 1961.50 for having been approached so aggressively. The best way to absorb a break is to isolate it. So, opening back above this morning”s bias-down target and extending above yesterday”s lows could launch a corrective rally into tomorrow afternoon. But if this pre-open drop is given any post-open oxygen, then it could become that 70-point downleg I noted yesterday was lurking.

First Trade…
Exiting the open at 9:45 above 1980.75 would be unlikely to trigger the 1978.75 bias-down signal at 10:15. Exiting the open under 1967.50 would be likely to renew the bias-down by not recovering the 1972.50 bias-down target.

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 sellers were very productive. But were they fully rewarded? The post-open bounce never touched Thursday”s 2029.25 cash session close, and barely filled the gap back to its 2024.00 futures close. The morning”s fresh lows at 2005.00-2006.00 reacted up to 2019.00 during the afternoon”s bias environment. But the bias environment exit and final hour”s entry were both within the noon hour”s range, so the decline did not gain traction. That didn”t prevent the last hour from plunging to fresh lows at 1995.00 and 1990.00.

Overnight action”s new info…
A quick dip to 1987.75 was quickly retraced, and overnight action has only trended up. Friday”s last-hour plunge has been retraced by more than 61.8% to 2008.50, still short of its 2013.75 origin.

If, then…
Since Friday”s decline gained no traction for its effort, extending down without delay requires new sponsorship. That would be evident by its steeper slope. Even that must endure a relevant timing window, because exiting the weekend with extreme sentiment is often a sentiment extreme. Gapping down but not extending could produce a strong intraday bounce. But a durable reversal won”t be credible without immediately recovering 2019.00. Otherwise, ranging back down toward overnight lows would be likelier.

First Trade…
Exiting the open at 9:45 above 2007.75 would be likely also to exceed the 2009.50 bias-up target through 10:15 to renew the bias-up signal. Exiting the open under 2001.25 would be unlikely to trigger the 2002.50 bias-up signal.