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 open followed a steep and then deep drop from Thursday’s 2707.00 cash session close. Already greeting Globex at 2688.00, overnight action had extended down to 2646.00. A 26-point bounce into and out of Friday’s open quickly peaked at 2672.00, and then plunged 44 points to 2627.50. The post-open plunge was isolated between the bias environment’s entry and exit, which tends to hold on Fridays. The setup’s vulnerability to reversing up into the weekend was exploited only temporarily to 2692.00 as the noon hour ended. But another drop attacked 2641.00 before firming into the close — which was all over the place. Cash session ended at 2657.50 on the way up to 2672.00 before futures settled.

Overnight action’s new info…
A false start may be resolving up. Although Sunday night’s open quickly surged to 2682.00, the market then drifted gradually back down to 2660.00 ahead of Europe’s opens. Flat-to-higher ranging around 2667.00 suddenly launched a 16-point surge back to and through the open’s highs, perhaps in reaction China trade headlines. A second surge is now testing 2692.50, up sharply from Friday’s close, and now testing Friday’s intraday high.

If, then… (notes to accompany the Tour recording)
Friday’s entire session developed entirely in negative territory, gapping down and probing a prior low but not closing under it. That last characteristic puts the “ineffectual” in Ineffectual Pessimism, a setup that can launch a counter-trend bounce. Which the overnight bounce may be foreshadowing, but it still depends on Monday’s open isolating Friday’s session. Otherwise, overnight buying pressure will have been expended without gaining traction for the effort, and could create a rubber band effect that snaps back down to resume last week’s decline.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2674.25 would be likely at least to trigger the 2668.25 bias-up signal at 10:15. Exiting the open above 2681.00 would be likely also to recover the 2677.50 bias-up target at 10:15 to renew the bias-up signal.

REMINDER: I’m away from the screens through Friday morning. Market Tour and First Trade will be recorded and sent, but the afternoon Bias Parameters may be delayed.

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…
“Through the prior close” tells half the story of yesterday’s session, and also all of it. PART ONE: Thursday’s 22-point gap up from Wednesday’s 2657.75 cash session close was retraced relatively little down to 2668.00 before extending higher. And higher, and higher — testing 2723.50 through the afternoon bias environment exit, and retesting it through the proxy window. The afternoon’s fresh highs were a bias-down rally that was doomed to failure, but could have extended the detour another 12 points higher. Eventually, the reaction down was triggered under 2715.50, but its timing was too late to rely on being more than brief and/or shallow. At least, through the cash session close, which dipped to 2701.00, retracing 38.2% of the post-open rally. PART TWO: However, AMZN and then GOOG earnings reactions triggered a plunge to 2684.00 through the futures close, retracing 61.8% of the post-open rally.

Overnight action’s new info…
A brief consolidation resolved down sharply to 2668.00, retracing Thursday’s post-open dip. Lower lows into midnight touched 2657.00. Bouncing greeted Europe’s opens at 2777.50, but the reception was soft and then softer. Attacking the 2657.00 earlier lows soon gave way to new overnight lows at 2646.00. Its reaction is testing the 2657.00 earlier lows as resistance.

If, then… (notes to accompany the Tour recording)
Thursday afternoon’s rally gained traction through the bias environment exit and final hour’s entry. Which is invalidated closing or gapping under the bias environment 2693.00 low. The cash session held, but futures did not. Expending the energy to recover it through the open could be rewarded better than yesterday’s intraday rally. Or, else. Else being a couple of major disappointments reversing a major expending of buying pressure to attack a major prior low — all with Friday Factors bearing down. How ugly could this get if not reversing through the open, or if the morning  doesn’t recover a brief probe under Wednesday’s lows? Majorly.

First Trade…
[Click here to view the Bias parameters] Being based on the prior session’s cash session close, this morning’s parameters are already antiquated. The next lower objective at 2654.00 is being tested, with room down to 2637.25 and 2632.00 before threatening 2595.00 and lower.

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…
A 30-point overnight pullback down to 2720.00 had bounced 26 points back up to 2746.00 before Wednesday’s open. That was sufficient to extend higher, but it didn’t. The overnight lows were retested, and probed down to 2704.00 before the morning bias environment began lapsing. Its 26-point bounce also resolved down going into the afternoon bias environment, and plunged coming out of it. The last minute’s 2652.25 low bounced 20 points to 2672.25 before the futures close. That’s 104 points under Tuesday afternoon’s highs. The two next lower objectives were neutralized at 2671.00 and 2663.75. The next lower objective was put into play at 2637.25.

Overnight action’s new info…
Wide and choppy sideways ranging persisted well through midnight. An earlier dip to 2659.00 was recovered to 2677.50, which was retraced back into the range around unchanged. Europe’s reaction to yesterday’s plunge was easily absorbed, and the relief soon launched a break higher to 2692.50. Its touch of yesterday afternoon’s bias environment “higher prior low” has reacted down 10 points.

If, then… (notes to accompany the Tour recording)
The current break higher has reacted down from barely touching yesterday afternoon’s bias environment “higher prior low” at 2692.50. My next cluster of resistance lies just above it at 2695.00-2697.00. Overnight action never requires a retracement, but it’s still likely so long as no pre-open downdraft has yet developed. I would consider selling that downdraft it appears before extending up to 2695.00-2697.00 or to 2715.50, either of which would be vulnerable to launching another downleg that resumes the decline. The ECB and Mario Draghi will be painting the headlines soon, along with more quarterly earnings releases, and then several econ reports at 8:30.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2686.00 would be likely also to exceed the 2679.00 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 2674.00 would be at least likely to trigger the 2671.00 bias-up signal at 10:00. Exiting the open under 2666.00 would be unlikely to trigger bias-up.

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…
Tuesday’s open was greeted by a 48-point relentless slide that fulfilled the required retest of the recent 2712.25 low. The open almost immediately extended the decline down to 2692.25 during the session’s first hour. The balance of the session trended back up to eventually touch 2754.00 — still in negative territory about 3 points short of unchanged. The position-squaring window dropped back down to 2738.75.

Overnight action’s new info…
Ranging sideways through midnight held Tuesday’s late 2738.75 low as support and found resistance at 2748.00-2750.00. Europe’s opens were greeted by trending to and through 2732.00 on the way to 2719.75. Now a reaction up is testing 2732.00.

If, then… (notes to accompany the Tour recording)
Closing back above Tuesday’s 2721.00-2723.25 opening highs creates a position of strength. Extending higher immediately was unlikely, as I explained during yesterday’s Market Wrap. The likely targets for a corrective dip were 2735.50, 2721.00-2723.25, 2715.50 or even down to 2701.50. Dipping to 2719.75 qualifies as a test of 2721.00-2723.25. This creates a new challenge, since its support test yesterday afternoon already launched its own upleg. So, either the rally will now resume into the open by first recovering 2735.50, or a fresh overnight low will next target 2715.50 or even down to 2701.50. Any lower would start to signal that Tuesday’s intraday bounce was self-fulfilling, its position of strength was being invalidated, and that the decline was resuming.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2735.50 would be unlikely to trigger the 2734.75 bias-down signal at 10:15. Exiting the open under 2729.50 would be likely to trigger bias-up.

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 gap down and probe under Friday’s 2756.50 low was recovered to greet Monday’s open having recovered positive territory up to 2780.50. The bearish WedEX greeted the recovery there, too, producing a 31-point side through the first hour, attacking the 2749.75 overnight low to within 1 point. This destroyed the overnight recovery’s Isolation setup, meaning that its buyers had failed to gain traction for their efforts, and also meaning that the market couldn’t support a bullish setup. The balance of the session ranged flat-to-lower, albeit more flat than lower, and choppily down to 2757.00. The pattern remained vulnerable to extending the decline, at whatever pace and slope.

Overnight action’s new info…
A timid Globex open soon justified its anxiousness by collapsing to 2738.00. Trending down relentlessly extended to 2731.00 by midnight and recently attacked 2714.00. Its reaction is testing 2722.00 as resistance, where fresh overnight lows (at the time) had greeted Europe’s opens.

If, then… (notes to accompany the Tour recording)
The recent low’s failed Ascending Triangle had bottomed by attacking 2712.00, requiring its eventual retest. The pattern’s false break higher had failed from the lower of its likely objectives at 2819.50-2823.00. Its retracement back into the Triangle under 2779.00 could have launched a bigger bounce than to test 2800.00, but its 61.8% retracement of the first downleg has launched the next downleg. And the Triangle’s support consists only of flimsy “prior lows” and no more “lower prior highs,” creating an air pocket if retested. Last night’s relentless slide through the pattern is an example of that air pocket. Still, the prior lows could have offered temporary obligatory bounces if tested intraday, and gapping down under them can inhibit new sellers from reinforcing the trend. Also, relentless overnight trending is vulnerable to attracting counter-trend sponsorship at the open. So, the opening 15 minutes of volatility could define the next 30-40 point move’s direction.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2737.00 would be likely also to exceed the 2746.50 bias-down target through 10:15 to renew the bias-down signal.