The First Trade

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Friday’s gap down to 2793.00 opened the door to lower targets at 2781.00 and potentially 2764.00. Both were met, the latter to within 2 ticks as the afternoon bias environment came within view of lapsing. That was the limit for a pullback, and any lower would have begun reversing the two-week old corrective rally — which was avoided already by delaying the test of 2793.00 until Friday. Surging as the bias environment lapsed came within 2 points of the 2793.00 open. Its resistance pushed back down to 2781.00 at the cash session close.

Overnight action’s new info…
Last gasp, or foreshadowing? Globex has told two stories, one of which developed entirely before midnight. Sunday night’s open had initially dipped several points to test what is this morning’s 2775.00 bias-down signal by several ticks. Its reaction rallied 21 points to within 1 tick of what is this morning’s 2795.50 bias-up target. Then its resistance started telling a different story, which has is back in negative territory and attacking the earlier low. If today’s cash session fulfills its potential to probe and then recover from negative territory (described below), then last night’s highs have established a likely objective.

If, then… (notes to accompany the Tour recording)
Three or four important features from Friday tell us what is likely to be this morning’s template. Most prominent is Friday being the second consecutive session spent exclusively in negative territory, and then also that this persistent weakness had avoided retracing back under a prior low. This is a lot of selling pressure to expend without gaining traction for the effort. Also prominent is that Friday satisfied selling pressure at its targets, which were recovered on a closing basis. So, no lower objective was put into play. Two consecutive trending sessions tend to persist into the third, which tends to reverse the trending. So, whether it be an attack on fresh lows this morning or their probe, or a gap up that trends down, the burden of proof would be on sellers to maintain their break through a relevant timing window — and under a relevant level. Absorbing a morning sell-off should be rewarded by launching at least a retest of Wednesday’s highs.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2772.25 would be likely to trigger this morning’s 2775.00 bias-down signal at 10:15. Exiting the open above 2781.00 would be unlikely to trigger bias-down.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Thursday’s gap down to 2804.50 bounced 9 points but didn’t hold. Its retest bounced 11 points, and also didn’t hold. The second bounce filled the gap back up to Wednesday’s cash session close, neutralizing its attraction above. Failed bounces and gap fills are potentially distributive behavior, with that potential being unleashed by breaking under relevant support. And that was essentially 2804.50. Sellers were aided in this effort by having left “unfinished business” below at the morning’s 2800.75 bias-down target. The FOMC policy statement’s reaction helped sellers, too, and the next lower objective at 2795.50 was met. Sellers could also get help from not recovering the 2804.50 area, which a late bounce was still testing until a last-minute surge attacked 2811.00. Oversold RSIs at Thursday’s 2795.50 low require an eventual retest.

Overnight action’s new info…
Globex was initially choppy as Thursday’s last-minute surge to 2811.00 was retraced to within 1 tick of what is this morning’s 2799.50 bias-down signal. All of which was recovered by midnight back up to 2811.00, which is this morning’s bias-up signal. Reversing down since then retraced the bounce, and then consolidated for a couple of hours at Wednesday afternoon’s 2793.75 low. Its eventual break extended to fresh lows at 2789.50, which is now reacting up to test 2793.00, this morning’s bias-down target.

If, then… (notes to accompany the Tour recording)
Wednesday afternoon’s 2793.75 low never required being tested as support. Reversing the trend down from Wednesday’s huge rally would have been signaled quickly by opening Thursday under 2793.75. Closing under it Thursday would have qualified, too, if confirmed immediately today. Delaying its break until today is no longer qualified to signal the trend reversing down. It is now only relevant support that is capable of containing the current pullback from Wednesday’s high. But just as the 2793.75 didn’t require a test, its test isn’t required to hold. Its break could extend down to 2764.50 before suggesting a more substantial reversal may have begun. Holding a test of either 2793.75 or 2764.50 — for example, isolating this 2793.75 test to the overnight — wouldn’t ensure the current pullback has ended, but it would help. And the reward for ending the current pullback is at least a retest of Wednesday night’s 2818.00 highs, if not also resuming the rally to the 2850.00 area.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2802.00 would be unlikely to trigger the 2799.50 bias-down signal at 10:15. Exiting the open under 2795.50 would be likely to trigger bias-down.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Wednesday’s 2779.25 open immediately surged back to pierce the 2787.00 pre-open high by 3 ticks. And that was quickly retraced almost entirely back down to its 2773.50 pre-open low. So much for a correction. The balance of the session trended up relentlessly, and substantially, extending for a last-minute touch of 2815.00. Futures extended to 2817.50. It was the highest level in three weeks. Actually, the three-week old prior high that had resolved down into a two-week long decline. And unless rejected almost immediately Thursday, the next higher objective has been put into play in the 2850.00 area.

Overnight action’s new info…
Hovering up to the post-close highs through the Globex open was ratcheted down to what is this afternoon’s 2808.75 bias-down signal through Europe’s opens. And then price began falling. So far, only back down to 2802.00, which is still support for having been yesterday afternoon’s bias-up target. RSIs just diverged positively on its retest.

If, then… (notes to accompany the Tour recording)
Yesterday’s pre-open 2787.00 high represented the maximum for still qualifying as only a correction of the last downleg from its 3-week old high. Other candidates for ending the correction were met during the past week, and although influential to price action, none ended or reversed the rally. Now comes the first candidate for qualifying as a correction of the entire decline from October’s highs. Its range begins at 2811.00 and extends to 2818.75, most heavily weighted just under 2813.00. Almost all of which was probed yesterday by a single leg without any complexity. This area’s influence can end the correction, or simply launch a brief pullback, both being considered as the rally didn’t extend any higher overnight. Gapping back down under the afternoon’s 2793.50 bias environment low would be credible. Otherwise, almost any shallower or later weakness Thursday would more likely be only backing-and-filling before resuming the rally. Regardless, we’ll give a benefit of the doubt to any trending that extends throughout the opening 15 minutes of volatility. We’ll also stop giving a benefit of the doubt to any trending that hasn’t broken support or resistance this morning ahead of the afternoon’s FOMC policy statement.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2805.25 would be likely to trigger the 2808.75 bias-down signal at 10:15. Exiting the open above 2811.00 would be unlikely to trigger bias-down.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Initially probing fresh highs overnight up to 2746.00 had failed to resume Monday’s rally. Later probing lower overnight to 2730.00 also failed to extend down. Extending either would have been likely to trend in that direction. Recovering 2738.00 through the open killed a bearish setup whose rejection would be as bullish as it could have been bearish. The gap back up to Friday’s 2751.25 open was filled almost immediately, and the balance of the morning ranged sideways. The noon hour’s fresh high at 2753.25 was reversed back down to 2738.00 as the bias environment began lapsing. Then it was back up to 2746.00 for more sideways ranging through the close. Oversold RSIs at the afternoon’s 2738.00 low require an eventual retest.

Overnight action’s new info…
Oh, what a night. Not at first, when Globex initially retraced Tuesday’s late surge back down to 2745.00. But that one step backward was followed by two steps forward, literally, when the 15-point dip snapped back up into a 30-point rally attacking 2775.00. Consolidating back down to 2757.00-2758.00 into Europe’s opens launched a 25-point rally to 2787.00. Backing-and-filling for the past 2 hours is testing 2779.50.

If, then… (notes to accompany the Tour recording)
Is this still a correction? Not if the rally extends any higher post-open. And probably not if the open extends higher aggressively. Until then it’s still a correction. First, according to context: this leg’s origin left “unfinished business” below at 2709.50 and 2738.00. Second, according to measurement: the entire recovery is now testing the room for noise beyond a 61.8% retracement of the last downleg up to 2781.00-2787.00. There are other corrective measurements that allow for probing well above 2800.00, but they generally require this morning’s open to surge through last night’s highs. For now, the 2787.00 high and the structure that got here has stretched the correction rubber band to its maximum tightness. NOT reversing back down immediately would instead break the band’s restraint, and visually explode higher. Trading early would get long on almost any opening uptick for the potential of a post-open short-squeeze — but with a relatively tight stop, and a not-too-distant short-entry below just in case that initial strength is isolated and rejected during the first 3-4 minutes, and then reversed down sharply. Trading early would also short almost opening downtick not holding the pre-open pullback lows.

First Trade…
[Click here to view the Bias parameters] Current price action is far removed from this morning’s bias parameters.

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

DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A

Through the prior close…
Sunday night’s rally actually started after midnight. Its first rally, which got up to 2729.50 before retracing back down to its 2720.00 origin. The second rally extended through the open up to 2733.25 before reacting back down even lower to 2717.00, perhaps in sympathy with the NDX collapse. Two overwhelming reactions weren’t enough to prevent a third rally from briefly probing a fresh session high during the morning’s bias environment. That one wasn’t reversed, but waited to extend higher until the afternoon bias environment attacked 2744.00. “Unfinished business” was left outstanding by the morning’s bias parameters at 2709.50.

Overnight action’s new info…
For all of yesterday’s choppiness, the market is almost right back where it started. Having ranged sideways since Monday afternoon’s bias environment began lapsing, Globex gradually crept higher to attack 2746.00. A shallow dip was recovered to retest 2746.00 in time for its reaction to begin sliding into and out of Europe’s opens. That slide has retraced to within 1 tick of Sunday night’s first failed that got to 2729.50.

If, then… (notes to accompany the Tour recording)
The door is open to rejecting all of yesterday afternoon’s rally by gapping down to and or through 2731.00-2733. Which is currently being threatened. Also being threatened is a Globex-flip, after having probed above yesterday’s highs and now indicated to open under the 2738.00 earlier Globex low. The setup’s likely objective  would be “unfinished business” at 2709.50. Forming the setup without triggering it could be as bullish as it would have been bearish. So, exiting the open back above the 2738.00 earlier Globex low would reinstate yesterday’s rally. It had fallen short of closing above 2743.00, which would have put into play 2748.00. But that would be back in-play, and probably also Friday’s opening gap back up to 2751.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2739.25 would be unlikely to trigger the 2734.50 bias-down signal at 10:15. Exiting the open under 2730.00 would be likely to trigger bias-down.