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…
Monday night’s eventual slide had fulfilled the intraday’s “unfinished business below” at 2721.50. The recovery attempt failed, and Tuesday’s cash session was greeted by a larger and steeper drop to 2712.50 before the open. And that was extended to 2703.25 through the first half-hour. But that was also the end of the downside momentum. No upside momentum replaced it, so several wide swings defined a 11-12 point range that gradually pierced lower and lower lows down to 2700.50. The last half-hour bounced back up to the range’s last relative high at 2711.00-2712.00. It had become too late anyway to recover anything predictive, or to offset that the range had gained no traction either way.

Overnight action’s new info…
Yesterday’s post-open range has largely held overnight, but for a brief probe above it. The Globex open had quickly retraced yesterday’s late surge by 61.8% to 2704.50, but it was eventually recovered back up to 2711.00-2712.00. Dipping to 2707.00 ahead of Europe’s opens was also recovered, and briefly extended to attack 2715.00. That was retraced as quickly back down to retest 2707.00, before recovering again to retest 2711.00-2712.00 — and being a 61.8% retracement of the earlier brief attack on 2715.00, its calculable resistance has pushed price back down to attack 2707.50.

If, then…
One of the instructions from Tuesday’s Market Wrap was that gapping up today above yesterday morning’s 2715.50 high would be credible for bouncing intraday. Both its resistance and its relevance are confirmed by having tested it overnight to within 3 ticks, and then reversing back down 8-1/2 points to that leg’s origin. Retracing that overnight high by 61.8% is calculable resistance, and happens to coincide with the natural resistance of yesterday afternoon’s highs. Their resistance has combined to push price back down sharply, but not yet irrecoverably. Overcoming resistance could rally through the morning. Otherwise, it’s not too late to greet the open back down at yesterday afternoon’s 2701.00 lows to try snapping back up again. But failing to hold the low would be credible for probing fresh lows, to 2695.00-2696.00 and possibly to 2689.00 or 2682.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2707.75 would be unlikely to trigger the 2703.50 bias-down signal at 10:15. Exiting the open under 2711.75 would be unlikely to trigger the 2716.25 bias-up signal. Exiting the open above 2713.50 would actually be likely to also 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…
Monday paid the price, or start paying it, for Friday not actually having corrected Wednesday and Thursday’s surges. Meanwhile, Monday was also the second consecutive session to probe fresh highs and then reverse back into negative territory. That’s less relevant for Friday, which isn’t as relevant of a session, but the combination is distributive anyway. Monday’s 2724.25 fell back into “lower prior highs” at Friday afternoon’s range. RSIs were only on the cusp of being overbought, which would otherwise be “unfinished business” above. And unfinished business below was left outstanding at 2721.50. But both recent sessions avoided closing negative, and the ongoing trend of higher highs and higher lows remains intact, so there’s not yet a trend reversal signal.

Overnight action’s new info…
Ranging narrowly between 2728.00-2731.00 started breaking lower on China’s disappointing economic data. Extending to 2720.50 fulfilled Monday’s unfinished business below. Its reaction bounced into and out of Europe’s opens on the way up to 2727.00. Its 61.8% retracement down to this morning’s 2724.00 bias-down signal was recovered to attack 2729.00. That’s unchanged from yesterday’s close, and natural resistance, which has reacted down to attack 2724.00.

If, then…
The likelihood for a failed probe lower wasn’t necessarily fulfilled by recovering the overnight dip. It did neutralize the nearest attraction below, and is trying to avoid triggering the bias-down signal. The recovery so far is only back to unchanged, which is also natural resistance. Triggering bias-down is still possible, and would be credible for probing Thursday afternoon’s low under 2713.00. Otherwise, rallying this morning  could be limited to 2737.50, or a retest of yesterday’s highs — which would be bullish if it were to avoid snapping back down sharply.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2725.25 would be less likely to trigger the 2724.00 bias-down signal at 10:15. Exiting the open under 2727.00 would be unlikely to trigger the 2732.25 bias-up signal.

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 up and probe of fresh highs was rejected after fulfilling the morning’s 2730.00 bias-up target up to 2732.50. Its reversal probed the open’s 2720.00 low by 1 point during the noon hour. The afternoon bias environment dipped 2-4 points into negative territory to 2716.75. But the trend never reversed down. And the balance of the session rallied 10-13 points up to 2727.00-2730.00. It was the first close above the rally’s 2721.50 target, although it was still being overlapped.

Overnight action’s new info…
Sunday night’s open spiked up to 2736.00, and consolidated briefly down to 2733.50. Gradually firming extended higher to pierce Monday morning’s 2739.25 bias-up target by a couple of ticks. Its 2-point pullback recovered to 2741.00 after midnight, but price action since then has trended back down to 2733.50.

If, then…
Friday’s pullback was relatively shallow to correct the two strong days preceding it. It wasn’t too brief, except that Fridays are already less relevant. So, this leaves the question whether resuming the rally requires a deeper pullback. And a deeper pullback would raise the question whether the rally had ended already, and the deeper pullback is actually the trend reversing down. Avoiding any dip to immediately extend higher can’t afford to hesitate, or else it would be vulnerable — if not likely — to duplicate Friday morning’s temporary rally, but with a more permanent reversal down. Greeting the open in negative territory could mean that last night’s action produced that temporary rally, and has reversed the trend down. Extending the rally depends largely on maintaining excessive optimism.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2737.50 would be likely to trigger the 2733.00 bias-up signal at 10:15. Exiting the open under 2729.75 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…
Thursday duplicated Wednesday’s strong intraday rally. Both gapped up, extended sharply higher into their afternoon bias environments, and then ranged sideways through the close around their next higher objectives. Thursday’s pre-open dip had touched Wednesday’s 2696.75 objective as support before rallying to its 2721.50 objective, which was tested up to 2725.00. Reacting down to 2713.00 was recovered up to 2721.50 through the cash session close. No “unfinished business above” was left outstanding.

Overnight action’s new info…
Globex was greeted back down at 2716.00 which had been the target of Thursday’s last reaction down. A gradual recovery to 2723.00 was suddenly retraced to 2716.50 before Europe’s opens (defensive posturing?) but the dip was soon recovered. And now the recovery has extended to probe yesterday’s highs attacking 2627.00.

If, then…
The similarities between Wednesday and Thursday’s consecutive rallies don’t dictate Friday’s pattern, but they do narrow down its possibilities. Thursday afternoon’s pattern does have a likely resolution, which is to gap up (i.e. to already extend the rally overnight) or at least to trend up into the open. Yesterday’s highs are finally being probed, or initially being probed — it’s still early. Another gap up? The Wednesday-Thursday similarities suggest this setup won’t extend higher, so we would expect it to reverse down. Opening flat or backing-and-filling could still resolve up, but would at least be vulnerable to reversing down.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2725.00 would be likely to trigger the 2722.75 bias-up signal at 10:15. Exiting the open under 2718.00 would be unlikely to trigger bias-up. Friday morning bias signals tend to persist through the noon hour.

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 night’s retest of Monday’s highs up to 2684.25 was retraced down to 2677.00 into Wednesday’s open. That wasn’t deep enough to resume the rally. Also, the open had slipped back under Monday’s prior highs, isolating the overnight gains and their upside momentum. So, the incredibly noisy wide morning bias environment eventually dipped deeper to 2672.00. That worked, snapping back up through the afternoon bias environment to 2700.00. The balance of the session ranged around it back down to 2691.00. The rally gained no traction for its effort.

Overnight action’s new info…
Wednesday afternoon’s ranging persisted until finally probing fresh highs before midnight. Hovering up to 2702.50 wasn’t moved by Europe’s opens, soon dipping to 2698.00. Its reaction has been retraced lower to 2696.50, unchanged from yesterday’s close.

If, then…
Having gained no traction for its effort Wednesday, a durable trend Thursday morning must begin by gapping open. Trending attempts aren’t otherwise required. But a trending attempt without gapping open is still possible, but shouldn’t get very far before reversing back through unchanged. Meanwhile, having probed yesterday’s highs overnight, opening back under the 2692.75 overnight low would be vulnerable to retracing yesterday’s rally. Holding an opening test of 2692.75 would instead launch a new rally leg.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2693.00 would be unlikely to trigger the 2690.25 bias-down signal at 10:15. Exiting the open under 2695.25 would be unlikely to trigger the 2701.00 bias-up signal.