The First Trade

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

Through the prior close…
S&Ps reached their maximum deficit at 1813.00, down 59 points as Wednesday afternoon”s bias environment got underway. Its reaction up retesting the morning”s ~1861.00 high by a couple of points. That was still down 11 points from Tuesday”s cash session close, and still in negative territory… Buyers gained no traction for the effort as the bias environment”s exit and final hour”s entry each were within the noon hour”s range. Then buyers overreached by extending to higher highs through the session”s last 45 minutes.

Overnight action”s new info…
Reacting down through the futures close probed slightly lower at the Globex open, touching 1842.00. Bouncing peaked at 1857.25 through Europe”s opens. Then things soured, soon plunging to test 1819.00. A trading range has developed back up to 1834.00 and down to 1815.00 — just a couple of points above yesterday”s low.

If, then…
Well, that answers that. Probing the 1840.00 corrective bounce target by so much and for so long undermined my corrective bounce template. The bounce was likely, but it was likely to resolve in new lows. Gapping down at or under 1826.50-1834.50 would reject all of the probing above 1840.00. Recovering any of those levels through the open would undermine sellers.

First Trade…
Exiting the open at 9:45 under 1833.75 would be likely to renew the bias-down signal by also remaining under the 1839.75 bias-down target through 10:15. Exiting the open under 1826.50 would be likely also to probe under yesterday”s 1813.00 low today, if not already this morning. 

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

Through the prior close…
The third consecutive morning denial exercise had once again avoided trending down Tuesday, while also holding tests of any relevant resistance like 1882.50 and 1893.00. And once again, the afternoon”s no-bias environment began lapsing and the decline resumed. Its 1877.00 exit was under the noon hour”s low, which was more obviously bearish than Friday or Monday, and the final hour”s entry was under both. The slide touched 1865.00 overnight lows and bounced, which was a little different.

Overnight action”s new info…
Tuesday”s late bounce initially extended overnight to test 1882.50 resistance by 3 ticks. Its reaction down to 1870.00 tried recovering 9 points, but then Europe”s opens triggered another reaction down to attack 1865.00. Its recovery attempt also failed, the worst failure yet, sliding sharply to new lows at 1857.50.

If, then…
A test of yesterday morning”s 1859.00 bias-down target was put into play by holding tests of both bias-up parameters. It didn”t become “unfinished business below,” but it is still support. The pre-open slide just tested it. And retested it, while 1-minute RSI diverged positively. It”s a “new Globex trend extreme” that requires being retested intraday — retesting it after bouncing back into yesterday”s range above 1865.00 could form a bottom that reverses up sharply for a Wreversal Wednesday. The alternative is probably capitulation that extends through tomorrow morning.

First Trade…
Exiting the open at 9:45 above 1871.75 would be unlikely to trigger this morning”s 1867.25 bias-down signal at 10:15. Exiting the open under this morning”s 1859.00 bias-down target would be likely also to extend under it through 10:15 to renew the bias-down signal.

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

Through the prior close…
Monday afternoon”s bias environment was almost identical to Friday. First, the last 60-90 minutes slid 30 points to new lows at 1865.00. Also, the final hour”s entry at 3:00 was under the bias environment”s low and the 3:10-3:20 timing window trended down. Sellers gained traction for their efforts again. One difference: Friday”s drop was exacerbated by the weekend”s illiquidity, which wasn”t a factor Monday afternoon.

Overnight action”s new info…
A blip down to 1863.75 was recovered to 1878.00, but that has been retraced down to 1865.00. Now a shallower bounce has been consolidating.

If, then…
Is the same pattern repeating for third consecutive day? That is, the early defense that fizzles later. The timing would be different, with the defense being isolated to overnight action. Perhaps some buying could influence the open before capitulation, but I would not hesitate to sell the first signs of weakness no matter how immediate. No accumulative pattern has formed.

First Trade…
Exiting the open at 9:45 under 1867.50 would be unlikely to trigger this morning”s 1876.25 bias-up signal at 10:15. Exiting the open under 1863.00 would be likely to trigger the 1865.50 bias-down signal.

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

Through the prior close…
Friday morning”s wide ranging, in and out of negative territory, ended with relentless trending well under prior lows. But sellers gained traction for the effort. The bias environment”s 1919.00 exit was on its way to probing under the noon hour”s low, confirmed by the final hour”s 1914.00 entry and the 3:10-3:20 window trending down to fresh lows. The cash session made it to 1899.50, and futures extended down to 1893.25.

Overnight action”s new info…
Sunday night”s open gapped down a little to 1892.00 and then slid a lot to 1880.50. Bouncing repeatedly pierced the 1886.00 bias-down target as resistance, while essentially ranging sideways to form a Symmetrical Triangle. The pattern began resolving up with Europe”s opens, and has extended to 1901.25.

If, then…
The pattern at Thursday”s close was projecting a duplicate of that day”s 40-point drop. That measurement was fulfilled at Sunday night”s low. This reminds me of forecasting several years ago for a 1000-point (Dow) downday that was fulfilled by also including a Sunday night low. That was in the midst of a more extended decline than this one, but we should still be prepared for possibility that selling pressure is satisfied. But even the most bullish scenario need not reverse up without a post-open dip — the most bearish scenario would allow only a brief opening bounce.

First Trade…
Exiting the open at 9:45 above 1903.50-1904.00 would be increasingly likely not to trigger the 1894.50 bias-down signal at 10:15. A bounce has room up to 1914.25-1917.75 through 9:45 before being any likelier to trigger the 1911.00 bias-up signal.

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

Through the prior close…
Thursday afternoon”s bias environment was greeted at ~1422.00, 40 points under Wednesday”s ~1462.00 close. The balance of the afternoon was choppy, but probed only 2 points lower. The first lower probe might have been considered a bullish victory had its recovery been maintained. But that was completely retraced. There was absolutely no bullish reason for that extra dip, which made the bearish timing much, much more immediate. Nevertheless, one more failed bounce to 1928.25 worked itself in before the close.

Overnight action”s new info…
The last failed bounce extended down without delay to fresh lows at 1915.00. Hope springs eternal, and Thursday”s last failed bounce to 1928.25 was attacked to within 1 tick. That was into and out of Europe”s opens. And that was the end of that. A new downleg fell to new lows at 1911.25.

If, then…
One of the two bullish paths starts by gapping down to fulfill the 1910.00 target, and failing to attract new sponsorship, the weekend”s impending illiquidity squeezes a reversal back up through Thursday afternoon”s highs. One of the two bearish paths start that way, too, by gapping down and then extending. Impending illiquidity can cut either way, and the opening 15 minutes of volatility will tell us much about that. Regardless, trending in one direction or the other is overwhelmingly likely.

First Trade…
Exiting the open at 9:45 under 1913.75 would be likely also to trigger the 1917.75 bias-down signal at 10:15. Exiting the open under 1908.75 would be likely also to renew the bias-down signal by exceeding its 1910.25 bias-down target through 10:15. Exiting the open above 1925.25 would be unlikely to trigger bias-down.