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…
Wednesday morning”s rally fulfilled the outstanding 1984.25 target, which was the rally”s highest calculable target, leaving overbought RSIs outstanding. Reacting down through the noon hour finally bounced off of the afternoon”s 1971.50 bias-down signal”s support. That extended down to 1961.00 from a 4-point bounce into the FOMC news. Several attempts to extend down were unsuccessful, and their “ineffectual pessimism” squeezed out a late buy signal above 1970.00 that bounced to 1978.50. But it was too late to gain traction. The close retrace all of the bounce.

Overnight action”s new info…
A narrow 3-1/2 point range finally began firming into Europe”s opens, and then soon accelerated higher to test this morning”s 1980.00 bis-up signal by 3 ticks. A relentless decline since then is now probing yesterday”s low by a couple of points down to 1959.75.

If, then…
So, the end of FOMC”s QE finally came with whimper, and not a roar. Not, yet. Other than being a delayed response, capitulating today seems a little too easy. And despite there being no post-FOMC trending, the market already has retraced the news reaction(s) — first probing its high and now its low. That usually takes a week, but there wasn”t much this time to retrace. Retracing all of yesterday”s drop so soon today would be more credible than extending it today, any deeper than to first test “lower prior highs” at 1955.00-1956.00. Remember that extending the recovery to 1984.25 already prevented this two-week rally from being a simple correction of the prior decline, so immediately rolling over isn”t likely.

First Trade…
Exiting the open at 9:45 above 1966.00 would start becoming unlikely to trigger the 1968.50 bias-down signal at 10:15, although recovering 1972.50 by 9:45 would be more predictive.

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 consolidation of the open”s gap up barely contained itself through the afternoon”s no-bias environment. As soon as possible, the rally resumed into the final hour, gaining traction throughout. Whether going by the 1977.25 cash session close or futures ticking up to almost 1981.00, closing above 1963.50 put into play 1984.25.

Overnight action”s new info…
Sympathy to FB”s post-close earnings triggered a gap down to 1974.50-1976.00. The balance of the night worked its way higher to probe fresh highs up to 1981.50. That is being retraced by a 6-1/2 point slide back down to 1975.00.

If, then…
Since yesterday afternoon”s timing windows indicated the rally gained traction, reversing without delay would require gapping down under a prior low. That”s essentially the 1974.50 overnight low. Any stronger open — or shallower opening dip — would be likelier to recover. That doesn”t require extending the rally indefinitely, which this afternoon”s FOMC policy statement will likely inhibit.

First Trade…
Exiting the open at 9:45 under 1975.25 would be unlikely to trigger the 1979.25 bias-up signal at 10:15. Exiting the open above 1980.00 would be likely 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…
Monday”s opening dip to 1944.50 simply extended the overnight slide that had been underway since soon after Europe”s opens. But it didn”t extend very far or for very long. Not that it launched a recovery — the balance of the session ranged back to Friday”s cash session close equivalent at 1958.00. Rising bottoms formed an intraday Ascending Triangle. The afternoon”s bias-up signal trigger, and wasn”t invalidated despite an hour spent probing under it. Left unmet, the 1960.25 bias-up target became “unfinished business above.”

Overnight action”s new info…
Narrow ranging at 1958.00 firmed after midnight to fulfill the outstanding 1960.25 objective. Ranging narrowly around it ended suddenly at Europe”s opens, surging to 1963.50 and 1964.50, and then almost spiking up to 1969.00. The three hours since then have formed a Symmetrical Triangle.

If, then…
Yesterday afternoon”s discussions centered around the “ineffectual pessimism” of not rejecting the upside target, despite having more than ample opportunity. Buyers had gained no traction, so the only way to extend higher immediately today would be to gap up. So, gapping up would be likely because of the “unfinished business above.” There is no assurance of maintaining the 9-point overnight rally, but it does create a lot of room to absorb a corrective dip before the open. I noted during yesterday”s Market Tour, one of today”s bullish templates is a gap up through 1963.50 that runs to 1984.00. It”s even likelier now, so long as the gap up isn”t reversed entirely through the open.

First Trade…
Exiting the open at 9:45 above 1963.50 would be likely also to trigger the 1961.00 bias-up signal at 10:15. Exiting the open above 1970.50 would be likely also to renew the bias-up signal by exceeding its 1967.25 bias-up target through 10:15.

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 morning”s dip under Thursday afternoon”s 1941.50 low was recovered to probe above Thursday afternoon”s 1956.25 high. Holding the morning”s probe through the 10:15 bias timing window had robbed its sellers of their traction. Similarly, the afternoon”s probes held through relevant timing windows, too — the bias environment”s exit and the final hour”s entry failed to improve. The final hour ticked higher anyway, closing at 1958.00-1960.00.

Overnight action”s new info…
Momentum continued overcoming the lack of traction as Sunday night”s open extended to 1963.00. A reaction down recovered even higher to attack 1966.00 through Europe”s opens. Gravity may have been switched back on, since a 12-point drop is probing back under Friday”s highs down to 1953.50.

If, then…
Overnight highs peaked 6 ticks short of touching this morning”s 1967.25 bias-up target. Its bias-down signal at 1954.25 has been attacked to within 1 tick. Probing twice above Friday”s highs warns of intraday trending attempts. Their interim dips back to lower and lower lows doesn”t actually suggest trending will fail, but that the first credible attempt will be likelier to extend. Credibility might trigger a preliminary signal, if not waiting to trigger either bias signal. Don”t forget that the rally”s next higher resistance after 1941.00 is 1963.50, and its influence can have the opposite effect.

First Trade…
Exiting the open at 9:45 above 1963.50 would be likely also to trigger the 1960.25 bias-up signal at 10:15. Exiting the open under 1951.25 would be likely to trigger the 1954.25 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…
Thursday”s “session long rally” had extended its gap up at 1940.50 16 points higher until violating the latest pullback limit at 1955.25. Several minutes later a sell signal was triggered under 1952.50 by a plunge to 1944.00 in reaction to the NYC Ebola headline. The balance of the afternoon ranged widely up to 1949.50 and down to 1941.50. Overbought RSIs were left outstanding at the high, along with the session-long rally”s final hour fresh high.

Overnight action”s new info…
The market came down with another case of Ebola. Very narrow ranging at 1945.00-1947.00 soon plunged again to 1931.75. More choppiness gradually worked its way back up to 1940.00. 1944.00 and 1945.00. Every reaction up and down overlapped 1937.75, which is being tested now as support.

If, then…
As a rule, knee-jerk reactions to headlines are retraced entirely, often also refueling the prevailing trend being attacked. So, if overbought RSIs at the high require a retest, and the earth explodes, then is the reaction down only temporary? I would argue, “yes.” But, hey, the earth exploded, so what do I care. The latest Ebola scare is one or two degrees less of an economic impact than suddenly having no earth beneath you — the lack of gravitational pull can suck, too. But it still qualifies as a paradigm shift that can abruptly antiquate the strong-handed sponsorship that produced the overbought RSIs. The difference should be in whether the next timing window were to extend the knee-jerk reaction. Regardless of lower lows overnight, triggering this morning”s bias-down or not should tell us whether the recovery is winning, or Ebola.

First Trade…
Exiting the open at 9:45 under 1934.50 would be likely also to trigger the 1939.75 bias-down signal at 10:15. Exiting the open above 1948.50 would be likely to trigger the 1950.50 bias-up.