The First Trade

Proper context can start the day with a solid win and make all the difference.

REMINDER: THE SITE WILL NOT BE UPDATED TODAY DUE TO TRAVEL.

BAD NEWS: THE CHARTROOM WILL NOT BE AVAILABLE DUE TO A TECHNICAL GLITCH. SUBSCRIBERS ARE ENCOURAGED TO “CHAT” AMONG EACH OTHER IN THE COMMENTS SECTION OF THIS POST. I”LL POST A QUICK MARKET TOUR THERE.

Through the prior close…
Sellers gained traction. Again. So had Wednesday afternoon”s sellers, but that didn”t prevent Thursday morning from rallying to 2049.50. A lot. It forced a complete retracement back to the 2026.26 open, probably exacerbated a little by the impending weekend”s illiquidity. The attempt to invalidate Wednesday”s trend change signal failed.

Overnight action”s new info…
Thursday”s retracement extended almost uninterrupted through the futures close, down to 2017.00. A 7-point bounce was retraced entirely, and then extended lower to 2015.25 and 2009.50. A bounce is now retesting 2017.00

If, then…
Two consecutive afternoons of sellers gaining traction. That”s distribution, and it suggests price is extending down. The wide intraday swings suggests the down move won”t be modest. The swings also keep the market vulnerable to intraday reversals. The confirmed trend change signal suggests the door is open to the weekend”s impending illiquidity encouraging much more selling — 2001.00 wouldn”t be surprising intraday if the open still hasn”t begun trending back up.

First Trade…
Exiting the open at 9:45 above 2022.00 would be unlikely to trigger the 2018.75 bias-down signal at 10:15. Exiting the open under 2012.25 would be likely to renew the bias-down signal by not recovering the 2013.25 bias-down target through 10:15, No preliminary level is currently visible that would make the bias-up signal any likelier to trigger.

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 drop extended down throughout the day. Tuesday”s weak-handed rally was retraced entirely to new lows. The decline gained traction by exiting the bias environment under the noon hour”s low, and by entering the final hour lower. The final hour was entered within 4 ticks of the decline”s 2022.25 target (basis Dec), bounced to 2035.00, then drifted back down through the close.

Overnight action”s new info…
Flat-to-higher ranging bounced back to 2035.00 (basis Dec). An 8-point reaction down recovered to attack 2035.00. That”s now reacting down, too.

If, then…
The front-month rolls forward at the open from Dec (Z4) to Mar (H5). It is trading at a 7.25 discount… Having gained traction yesterday, the decline is due for lower lows — not simply piercing fresh lows, but actually trending with some complexity. Buy signals probably won”t be considered until that is done. Gapping up enough and maintaining it could avoid fresh lows today, but that”s not currently being threatened. So, gapping up could be very attractive for short-entry.

First Trade…
Exiting the open at 9:45 above 2027.50 would be likely also to trigger the 2023.75 bias-up signal at 10:15. Exiting the open above 2033.75 would be likely to recover the 2030.25 bias-up target through 10:15 to renew the bias-up signal. Exiting the open under 2020.50 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…
Tuesday”s bias environment initially extended the noon hour”s rally up to 2057.75, but then dipped 7 points and still held above the noon hour”s range. Fresh highs weren”t probed until after 3:20, and the probe peaked upon filling the gap back to Monday”s 2060.50 close.

Overnight action”s new info…
Narrow ranging between 2055.00-2060.00 has just probed lower to test 2053.00. That”s natural support, being a 61.8% retracement of yesterday”s bias environment pullback.

If, then…
Despite exiting the bias environment above the noon hour”s high, yesterday”s buyers gained no traction for their efforts, since neither of the remaining windows contained a fresh high. And no unfinished business was left outstanding, since the rally”s next target was fulfilled and the gap was filled, both without closing above them. Still, a probe of fresh highs can”t be precluded before reversing down. And a probe of fresh highs could still extend higher, albeit still vulnerable to failure.

First Trade…
Exiting the open at 9:45 under 2052.50 would be likely also to trigger the 2051.50 bias-down signal at 10:15. Exiting the open above 2057.50 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…
Monday morning”s objective to probe back into positive territory at 2077.75 was prevented by a noon hour plunge to fresh lows at 2064.25. The noon hour”s exit plunged again to 2053.75. The late afternoon”s bounce testing 2062.50 was high enough to trigger a short-squeeze, but didn”t last long enough, and the balance of the session ranged narrowly sideways back down to 2057.75.

Overnight action”s new info…
Rather than trigger a short-squeeze, Monday”s late ranging had formed a Complex Descending Triangle. Its minimum objective at 2051.50 was eventually met before Europe”s opens, amid wild swings in the Shanghai Composite. A fresh low at 2049.50 reacted up 6 points, and now 2051.50  is being retested.

If, then…
A characteristic of the Complex Triangle is that it can reverse back up abruptly from its target. If the 2051.50 target is not the low, then the pattern”s next target is 2046.00 with room for noise down to 2044.50. While the rubber band would be stretched pretty tight and a lot of selling pressure expended, extending that much lower would be extremely vulnerable to attracting new sponsorship for a deeper slide targeting 2022.25.

First Trade…
Exiting the open at 9:45 under 2050.00 would be likely also to exceed the 2051.50 bias-down target through 10:15 to renew the bias-down signal, next targeting 2044.50-2046.00. Exiting the open above 2059.50 would be unlikely to trigger the 2056.50 bias-down signal, putting into play an offsetting test of the 2065.50 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…
Friday”s flat-to-higher ranging finally probed a fresh high at 2079.00 just before noon. Price action has been flat-to-lower since then. The afternoon”s touch of 2069.75 reacted up 5-1/2 points into the close. Sellers had already gained traction — the bias environment was exited under the noon hour”s low, and the final hour was entered under both.

Overnight action”s new info…
Sunday night”s open ranged sideways between 2074.25-2077.50. It might have been poor economic news from China that sparked the first dip down to 2073.00. Europe”s opens didn”t help, and now Friday afternoon”s low is being retested down to 2067.75.

If, then…
Friday afternoon”s drop gained traction for its efforts. So, gapping up is the only way to ensure a test of positive territory today, if not also through tomorrow morning. Fresh lows are otherwise likely, perhaps even trending down. The overnight drop is finding support at what is this morning”s 2068.00 bias-down signal.The most bullish scenario today might be to fill the gap back to Friday”s 2075.25 close while ranging choppily in negative territory. Triggering bias-down would be more bearish near-term.

First Trade…
Exiting the open at 9:45 back above 2072.50 would be unlikely to trigger the 2068.00 bias-down at 10:15. Exiting the open under 2065.50 would be likely to trigger bias-down… Reminder: I am broadcasting from the road this week, so please let me know about audio quality or any other issues that I should address.