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…
Not reversing down at Wednesday”s open was likely to marginalize sellers through the morning, if not through the noon hour. Regardless of which, trending up was unlikely. Probing fresh highs above 1941.00 resistance into the bias environment”s exit was rejected into noon, fulfilling a reversal setup. So strong was the reversal that the afternoon”s first sell signal that triggered under 1940.25  extended 12 points before violating a bounce limit. The bias environment”s exit bounced up to 1931.50, and the final hour flushed to 1920.50-1921.25 at the cash session close. Futures bounced to 1927.25.

Overnight action”s new info…
Intraday swings took a rest, for awhile. Sideways ranging defined essentially by 1922.50-1928.50 greeted Europe”s opens at the range”s upper-end. A quick dip to its lower-end ricocheted up to fresh highs that soon spiked up to 1939.00. Sliding back to 1928.50 has reacted back up.

If, then…
Recovering 1920.50-1921.25 Tuesday afternoon had put into play 1941.00. Retracing it immediately and completely expends a lot of near-term selling pressure, and sellers gained no traction for yesterday afternoon”s efforts (i.e. their targets were met and held, fully rewarding them, without establishing new lower targets). Meanwhile, yesterday”s close trended down, and the afternoon”s high is the bias environment”s high, so gapping up above it would form a “session-long rally” setup. By the same token — by its flip-side, actually — posturing to fulfill the setup but not triggering it can have the opposite effect. And the overnight rally is well-postured to gap up enough, so not extending higher immediately could be very bearish.

First Trade…
Exiting the open at 9:45 above 1933.00 would be likely also to exceed the 1931.25 bias-up target through 10:15, which would renew the bias-up signal. Exiting the open under 1927.50 would be likelier not to trigger the 1925.75 bias-up signal, and put into play an offsetting test of the 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…
Gapping open to 1911.00 Tuesday extended higher instead of reversing down, making it likely that sellers were marginalized through the morning or noon hour. Trending up through both to 1928.00 was retraced a little into the bias environment, which resumed the rally to 1936.00. A pre-open dip was recovered to almost 1940.00 before the Globex open.

Overnight action”s new info…
One of the two bearish scenarios I describe in today”s Trading Plan was tracked perfectly. The Pivot Reversal: Gapping down into a shallow pullback that recovered to fresh highs up to 1943.75, then reversing down to fresh lows at 1930.75. But being overnight, its bearish influence is may be moot at the cash session open

If, then…
Overnight action is essentially the Pivot Reversal pattern I describe in the Trading Plan, which is one of two bearish scenarios. Yesterday afternoon”s last pullback was from 1936.25 down to 1931.50. Greeting the cash session open beyond either end of that swing low would be likely to extend in that direction. If higher, then there is still the potential to hold an early test of 1941.00. Already having formed a pattern overnight, it is difficult to repeat it at the open, so not extending down already at the open could itself be bullish.

First Trade…
Exiting the open at 9:45 under 1933.25 would still be unlikely to trigger the 1936.00 bias-up signal at 10:15. Exiting the open above 1938.75 would be likely to trigger bias-up. Exiting the open above 1943.00 would be likely also to exceed the 1941.00 bias-up target through 10:15, which would 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…
Monday morning”s recovery from gapping down to 1875.00 became an afternoon series of small non-accumulative swings. Raching 1898.50 at the cash session close, AAPL”s favorable earnings pushed that up to 1904.50 before the Globex open.  Unfinished business below as left outstanding at the 1874.00 and 1890.00. But buyers gained traction for their efforts, exiting the bias environment above the noon hour”s high, and entering the final hour probing both.

Overnight action”s new info…
Reaction to the reaction… Already having discounted AAPL”s favorable earnings before its open, Globex slid relentlessly to retest  Monday”s noon hour lows. That was the low and it was retraced well above Monday”s highs, thanks to a headline that ECB is planning to inject liquidity by buying European corporate bonds. That sparked a 31-point rally, reversing the initial 19-1/2 point slide from within 1 tick of this morning”s 1885.50 target by 31 points to probe 10 points above this morning”s 1906.50 bias-up target — which a dip is now testing.

If, then…
The overnight slide probed under levels where gapping open would have reversed the trend down. Gapping so deeply would have been the only path down, since yesterday afternoon”s buyers had gained traction to signal higher highs for this morning. Despite that signal seemingly about to be fulfilled by higher highs this morning, I give the rejection attempt more credibility. I”m not looking at a different price quote than you are — rather, I”m preparing for the overnight rally to peak at or just after the open, if not before — which would put back into play the overnight intentions. Not confirming the reversal through the open would mean the overnight rally had gained sponsorship to be duplicated and extended this morning.

First Trade…
Exiting the open at 9:45 back under 1904.50 would be unlikely to exceed the 1906.50 bias-up target through 10:15, and that would fail to renew the bias-up signal. Exiting the open under 1898.25 would be unlikely to trigger the 1901.25 bias-up signal, which would put into play at least a test of the 1993.25 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…
Friday morning”s expiration rally began by gapping up. The afternoon”s bearish WedEX influence sent price back down to within 1 tick of post-open lows. Bouncing into the close only corrected the afternoon drop by retracing 61.8% of it to close at 1880.00. WedEX”s bearish influence seemed to be intact.

Overnight action”s new info…
Sunday night”s open gapped up to extend Friday afternoon”s bounce. Friday morning”s 1891.75 high was probed up to 1893.50. Eventually dipping back down to 1882.00 into Europe”s opens.Hovering optimistically short of Friday”s 1880.00 close gave way into IBM”s earnings miss, attacking 1873.00.

If, then…
Retracing last night”s gap up, and also beginning to retrace Friday”s last bounce, is all irrelevant to the bearish WedEX. The signal expects the morning to trend down post-open, regardless of overnight action trending up or down, or all around. It is informative that the overnight high did peak at this morning”s 1893.00 bias-up target, and it is now struggling to hold this morning”s 1874.00 bias-down signal.

First Trade…
Exiting the open at 9:45 under 1871.00 would be likely also to trigger the 1874.00 bias-down signal at 10:15. Exiting the open above 1888.00 would make the 1885.25 bias-up signal likely to trigger.

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

Through the prior close…
Bullard”s “pause-taper” comments Thursday morning extended a recovery that was starting to falter — if not already resuming the overnight slide. The morning”s test of Wednesday”s 1861.00-1862.50 area highs was probed up to 1870.00 in the afternoon. The close fell back under Wednesday”s highs.

Overnight action”s new info…
A wide range from 1851.00-1864.00 broke higher soon after Europe”s opens. The 22 point rally barely hesitated at Wednesday and Thursday”s highs while trending up to 1876.50. A consolidation support by this morning”s 1872.50 bias-up target blipped-up to 1878.75, and being only a blip, reversed back down to the range”s 1872.50 lower-end.

If, then…
The bearish WedEX forecasts Friday afternoon”s price action, and often the morning”s behavior can be contrary. Less so when gapping open on expiration, which can make the entire session more single-minded. Especially when the opening 15 minutes of volatility trends throughout. Price action through 9:45 that has trended will be likely to persist in that direction throughout the day. Gapping up on expiration is likelier to reverse down from there, so not reversing down through the open would be bullish, and would start to suggest the bearish WedEX will invert.

First Trade…
Exiting the open at 9:45 above 1877.00 would be likely also to exceed this morning”s 1872.50 bias-up target through 10:15 to renew the bias-up signal… with potential for extending to 1901.50 or 1906.00. Exiting the open under 1860.00 would be unlikely to trigger the 1863.00 bias-up signal, putting into play at least an offsetting test of the 1841.00 bias-down signal