The First Trade

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

Through the prior close…

See if you can find the relevant level: Wednesday”s decline hit an important low at 1937.75 during the afternoon bias environment. Its 5-point bounce up to attack 1943.50 was reversed down to 1933.75, and then recovered fully to pierce 1943.50. The relevant level is 1943.50, being a “lower prior high” that has been on the radar among this decline”s potential lows. Two lower lows in the midst of a steep, deep decline thought it to be relevant enough to revisit from below — twice. Closing under it, but above the 1937.75 pivotal low, suggested that this leg”s sponsorship was done.

Overnight action’s new info…

With one leg”s sponsorship being done, the next open will help to define the next leg”s new sponsorship. Overnight action hasn”t yet been very revealing. Narrow ranging tried to firm back up to 1943.50, only to tumble down to 1936.00. That was no more successful, now having recovered to retest 1943.50. Did I mention this is a relevant level?

If, then…

If this downleg”s sponsorship is done, then new sponsorship will change the slope, but not necessarily direction. Trending down sharply at the open would suggest the decline is extending. The overnight dip cleared away support that might slow a post-open drop from accelerating down. Its low wasn”t arbitrary, but a test of support at this morning”s 1936.50 bias-down signal. Rallying above 1943.50 through the open may be the last opportunity for bullish sponsorship to retake control.

First Trade…

Exiting the open at 9:45 under 1937.50-1938.25 would be likely also to trigger the 1936.50 bias-down signal at 10:15. Bias-down is less likely to trigger if the open were exited above 1940.00. Exiting the open above 1943.50 would be likelier to trigger the 1945.25 bias-up signal. Touching 1946.25 through the open must recover it, too, to maintain a bullish open.

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

Through the prior close…

Similar to Monday, sellers tried to gain traction, but failed repeatedly. Their one success at triggering the afternoon”s bias-down signal fulfilled its target almost immediately. Notice the chart”s PM timing window comparisons. Fresh lows during the bias environment were recovered back to the noon hour”s low just in time to qualify at the bias environment”s 2:30 exit. You have to look closely to make the distinction. Similarly, the final hour”s entry was trying to probe back under the noon hour”s low, but was still overlapping it at 3:00. Sellers weren”t gaining traction for their efforts. That”s not a buy signal, and it didn”t interfere with the pattern still being likely to probe a fresh low. In fact, a sell signal triggered just before the close.

Overnight action’s new info…

The last sell signal that triggered under 1966.75 extended through yesterday”s futures close to probe a fresh low at 1959.00. That was retraced entirely, back above prior lows, back into positive territory, and back to 1966.75. Pullbacks have been holding tests of 1963.00.

If, then…
Tuesday”s last sell signal was likely to probe fresh lows overnight, and somewhat likely to greet Wednesday”s open in rally mode. The actual low stopped optimistically short of touching the first attraction at Monday”s 1957.00 opening gap. So, the rubber band could have been stretched a little further overnight before trying to snap back this morning. But opening any higher would be very compelling for launching a morning rally.

First Trade…
Exiting the open at 9:45 above 1968.00 would be likely at least to test this morning”s 1970.75 bias-up signal. Exiting the open above 1972.25 would be likely also to trigger bias-up at 10:15. Exiting the open under 1961.25 would be likely to probe fresh overnight lows.

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

Through the prior close…
Greeting the new week with extreme sentiment is often a sentiment extreme. Monday”s open was. But the morning”s rally from gapping down at 1957.00 expended too much energy too quickly to gain traction. The morning bias environment”s 1972.75 peak was retraced 10 points into the afternoon bias environment”s to 1962.75 low. That dip held a test of the noon hour”s low to prevent sellers from gaining traction (sellers failed an attempt to gain traction). That dip also recovered to probe the morning”s high up to 1974.00 through the 3:10-3:20 timing window (buyers did gain traction). Another dip into the close fell to 1968.00.

Overnight action’s new info…
Narrow ranging until midnight finally resumed Monday”s recovery. A consolidation up retesting 1974.00 broke higher to 1977.50 where another consolidation has formed.

If, then…
If Monday”s recovery were going to extend any higher Tuesday, then it was likely to begin by gapping considerably. Overnight action indicates a gap up above yesterday”s highs and above Friday”s close. That”s a start. But testing the bias-up signal without triggering it would target negative territory, and be vulnerable to probing yesterday”s lows.

First Trade…
Exiting the open at 9:45 above 1977.00 would be likely also to trigger the 1975.75 bias-up signal at 10:15. Exiting the open under 1972.25 would be unlikely to trigger bias-up, and under 1970.00 at 9:45 would be likely also to trigger the 1964.50 bias-down signal at 10:15.

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

Through the prior close…
The Friday Factor of less participation and lower volume exploited the morning”s choppy range that had avoided retesting Thursday”s lows. The noon hour”s exit triggered a buy signal at 1965.75 that surged 13 points to 1879.25 through the bias environment”s exit. The final hour drifted down 6 points before the close. Overbought RSIs were left outstanding at the high.

Overnight action’s new info…
Sunday night”s open immediately extended Friday”s late pullback to 1971.50. Its history of support triggered a reaction up to 1977.00, but that failed abruptly by plunging to fresh lows. A consolidation supported by 1966.25 has broken lower to 1961.75, where Friday”s noon hour was entered.

If, then…
The only question about Friday afternoon”s rally failing was whether the afternoon”s high would be retested first. Its attraction above remains outstanding, which is in-line with expectations for the retracement to form a better bottom. That”s also suggested by the overnight drop being influenced by ongoing relevant levels — its first bounce was from 1971.50, which is this morning”s bias-down signal, and its only other significant support is also this morning”s 1966.25 bias-down target. Now the only question about the retest of Thursday”s lows is whether it will be by an actual lower low, or if retracing 61.8% of Friday morning”s range would serve by proxy. That level? The overnight low, 1961.75.

First Trade…
Exiting the open at 9:45 under 1964.25 would make the 1966.25 bias-down target likely to be exceeded through 10:15, which would renew the bias-down signal. Exiting the open above 1970.00 would suggest the bias-down target won”t break lower through 10:15.

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

Through the prior close…
Thursday morning”s plunge fell and never got up. The afternoon”s 1959.00-1965.00. range was sold off into the futures close deep enough to suggest a hold-short, which futures retraced enough to undermine. But no bottom was indicated, and the close under prior lows signaled a trend change.

Overnight action’s new info…
Much of the night was spent in a narrow 1-point range hovering just under Thursday afternoon”s 1965.00 highs. Sliding into and out of Europe”s opens tested the range”s 1959.00 lower-end. That dip was gradually recovered to probe fresh highs, but only momentarily as another narrow consolidation forms just under 1965.00.

If, then…
The overnight range can be defined as touching both of this morning”s 1958.75-1964.00 bias signals. They have prevented trending beyond Thursday afternoon”s range. Regardless, fresh lows are likely if the open isn”t gapping up And either should start becoming obvious very soon.

First Trade…
Exiting the open at 9:45 above 1962.75 would make this morning”s 1958.75 bias-down signal unlikely to trigger at 10:15. Exiting the open under 1957.25 would make the 1958.75 bias-down signal likelier to trigger.