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…
Thursday”s 2069.75 opening print was recovered during the noon hour, after the morning probed under it down to 2061.25 (no ECB stimulus proposal). Spiking above it to a new high at 2076.25 (possible ECB stimulus proposal) reversed back to 2069.75 again. The reversal extended down another 4 points (doubts about ECB stimulus proposal), but rallied 7 points into the futures close which tested 2073.00. Oversold RSIs at the low require a retest. A knee-jerk reaction to news produced overbought RSIs at the high, so they don”t require a retest.

Overnight action”s new info…
Trending and choppiness tend to be limited ahead of an Employment Situation report. Last night was no exception. A very narrow range centered around 2072.00 did rally once at Europe”s opens. Its reaction down from 2075.00 has formed a Symmetrical Triangle supported by 2073.00.

If, then…
Greeting the Employment Situation report at the highs tends to probe higher intraday. Recovering from an intraday probe into negative territory also helps to create upside potential. So, an initially negative knee-jerk reaction down would get a benefit of the doubt for recovering and reversing. But regardless of whether positive territory were probed initially or after recovering from below, the pattern remains vulnerable to trending down into the weekend. Probing new highs is not required, and could be made irrelevant by simply failing to trigger bias-up.

First Trade…
There are no preliminary levels before an Employment Situation report.

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…
New high! (Sort of.) Wednesday”s opening rally from 2066.00 extended to 2072.25 through the morning. That stopped pessimistically short of touching last week”s 2073.25 intraday high, which was the minimum objective for Monday”s test of the 2051.00 “lower prior highs.” Consolidation through the afternoon still managed to improve at the right times to gain traction. A single surge to 2076.00 probed a new high before retracing to test 2073.25 into the close

Overnight action”s new info…
Flat to higher ranging is attacking this morning”s 2075.75 bias-up signal. There was no discernible reaction to the BOE policy statement (unchanged/unchanged). ECB is minutes away.

If, then…
Wednesday”s rally gained traction for its efforts, making at least the morning likely to probe fresh highs, so long as the open hasn”t gapped down considerably. Meanwhile, Wednesday”s rally failed to convert its new high close into a breakout, since its singular surge was still overlapping prior highs. Even avoiding a gap down in order to try trending higher would be vulnerable to an afternoon reversal down.

First Trade…
Exiting the open at 9:45 above 2073.25 would become likely also to trigger the 2075.75 bias-up signal at 10:15. Also touching 2079.50 without exceeding it by 9:45 would start to undermine the bias-up for expending too much energy too quickly without attracting new sponsorship soon enough. Exiting the open under 2068.25 would make the bias-up unlikely 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…
Gapping up Tuesday trended higher throughout the day, with only one timing window (noon hour) not probing a fresh session high. The rally gained traction for its efforts by exiting the bias environment above the noon hour”s high and by entering the final hour even higher. The last hour”s test of 2067.75 resistance reacted down to 2064.00.

Overnight action”s new info…
Tuesday”s late reaction down was retraced back up to 2067.75 resistance. Its retest was reversed again down to 2063.25. Reactions from its test and retest have reacted up to test and retest 2066.25 — essentially unchanged from yesterday”s close.

If, then…
Having gained traction yesterday afternoon, extending the rally is likelier than reversing it. Reversing it would require gapping down substantially. Overnight action hasn”t yet threatened either extending or reversing the rally. Reaction to ADP”s 8:15 ET jobs report will be next opportunity to jump start volatility. This afternoon”s Fed speakers and Beige Book may be the last opportunity to accelerate trending or to reverse it — in either case, especially if last week”s highs had been probed already intraday.

First Trade…
Exiting the open at 9:45 above 2067.75 would be likely also to trigger the 2069.50 bias-up signal at 10:15. Exiting the open under 2060.00 would be likely also to trigger the 2062.25 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…
Exiting the weekend with extreme sentiment is often a sentiment extreme. If that were the case yesterday, then post-open action would have rallied at some point. It did not. Every timing window probed 2051.00 “lower prior highs,” almost down to 2048.00. Ultimately, intraday action did no further damage than had been done intraday, and neither buyers nor sellers gained traction for their efforts.

Overnight action”s new info…
Monday”s last swing was dipping back into the range, and it extended down into the Globex open. But its low only attacked intraday lows. A rally back up to Monday”s 2059.00 high reacted back down to attack 2051.00.

If, then…
Not yet rejected, sellers might still be productive. Gapping up above Monday morning”s 2059.00 high would suggest otherwise, forming a “session-long rally” setup. Attacking 2059.00 overnight doesn”t make its recovery any likelier. It doesn”t prevent probing today under yesterday”s lows, but it might create more room to absorb and recover from that selling.

First Trade…
Exiting the open at 9:45 above 2059.00 would be likely also to trigger the 2057.50 bias-up signal at 10:15. Exiting the open at 9:45 under 2052.50 would be unlikely to trigger this morning”s 2057.50 bias-up signal at 10:15. No preliminary level this morning would make the bias-down signal 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…
Friday”s return from the Thanksgiving holiday seemed to be duplicating Wednesday”s pattern — gapping down to test the 2067.75 bias-down signal, putting into play an offsetting test of the 2074.00 bias-up signal. The setup did play out again. But despite the early close, Friday still found time to trend down sharply and attack the week”s lows at 2064.00 support. A last minute bounce satisfied its 2067.75 target.

Overnight action”s new info…
Sunday night”s open gapped down to 2064.00 and spiked down about 9 points to 2055.25. A bounce to 2062.25 resolved down about 9 points to 2052.00. Now another bounce is finding difficulty at 2061.00.

If, then…
A fresh low was likely this morning because Friday”s drop had stopped optimistically short of touching the 2062.75 prior low, and its bounce”s 2067.75 target had been satisfied to prevent signaling a hold-long. The vulnerability was exploited by weak Black Friday retail reports and Gold”s plunge in reaction to the Swiss referendum. Extreme sentiment gapping out of the weekend can be a sentiment extreme — recovering a prior low through the open could extend today to probe last week”s highs. Otherwise, triggering bias-down would make at least a 1-2 day detour likelier.

First Trade…
Exiting the open at 9:45 above 2062.75 would be unlikely to trigger the 2060.25 bias-down signal 30 minutes later at 10:15. Exiting the open under 2056.75 would be likely to trigger bias-down.