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…
Tuesday’s open was greeted back at the lower-end of its overnight range. The overnight range had still felt the influence and momentum of Monday’s steep decline. Its minimum objective of 2641.50 had been touched earlier overnight but its rejection failed. The next lower objective at 2635.00-2638.00 was met during the open, and its break came within 1 tick of the 2623.00 target at the afternoon low. The bias environment reversed up to recover all of those objectives, and the balance of the session extended to recover positive territory up to 2653.00-2654.00. The rally gained traction for its effort.

Overnight action’s new info…
A tree fell in a forest last night. Globex began like a mirror image of the prior night, immediately extending the late intraday surge to 2658.00, then immediately starting a narrow range between 2654.00-2656.00. That was blind-sided by headlines that Mueller wants an interview. And wants it bad. Like, subpoena in the pocket bad. Not terribly surprising news, but thin volume at that time enabled a 12-point plunge to 2643.50. The balance of the night gradually recovered the original surge’s high up to 2658.50. Another plunge to 2651.00 has quickly retraced up 61.8% and more to 2657.00.

If, then…
Having gained traction for its effort, Tuesday’s recovery was likely to extend higher today, unless the open were to gap down sufficiently. The overnight knee-jerk reaction to Mueller’s big subpoena headline was an opportunity to gap down, but it was absorbed. Its retracement suggests that fresh highs are still intended, at least this morning. The second overnight dip suggests that fresh highs might not be tenable. But yesterday’s traction combined with now recovering two overnight plunges also requires probing higher immediately, or else a post-open plunge becomes likely. The afternoon’s FOMC policy statement’s reaction will depend greatly on what is accomplished this morning.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2660.25 would be likely to trigger the 2658.50 bias-up signal at 10:15. Exiting the open under 2655.00 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…
The week started by tracking the topping template of testing 2681.00 and rejecting it back under 2677.00. The reversal was likely but not required. And it had to develop through a relevant timing window, which it did, as the morning slid to 2663.00 and the afternoon extended down to 2646.00. The reversal was likely a delayed reaction to headlines announcing Netanyahu’s planned speech, and the speech’s eventual delivery helped the decline to extend sharply lower. An anchor of sorts had formed by holding above 2677.00 through the morning’s bias timing window, which was capable of launching another probe of fresh highs. So, there is a question outstanding whether the decline was artificial and recoverable, or organic and on its way lower.

Overnight action’s new info…
Monday’s late 13-point drop from 2659.00 to 2646.00 extended without delay to 2641.25 through the Globex open. That leg was retraced by 61.8% to attack 2654.00 ahead of Europe’s opens. But Europe’s open were having none of it, and the earlier low was attacked to within 3 ticks. Now that leg has been retraced by 61.8% to 2649.25.

If, then…
Monday’s decline didn’t gain traction, so gapping up above its 2658.50 prior highs would likely reverse the trend back up. That’s not currently indicated, but for future reference, the minimum reward for reversing yesterday’s trend before it gains traction would be to probe fresh highs up to 2684.25. It would also prove the decline’s catalyst was artificial. I noted in yesterday’s Market Wrap that the artificial catalyst can still be productive down to 2641.50-2641.75, which overnight action has now tested — and its test was clearly influential by the bounce it produced. A temporary bounce, but maintaining an open above yesterday’s 2646.00 low can isolate the overnight probe and try reversing the trend up. Not yet reversing up through Tuesday’s open would next target 2635.00-2638.00. And then 2623.00, back into position for toppling the dominoes below.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2650.75 would be unlikely to trigger the 2642.75 bias-down signal at 10:15. Exiting the open under 2641.50 would be likely to trigger bias-down. Exiting the open above 2656.75 would be likely to trigger the 2653.25 bias-up signal.

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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 was greeted by sideways ranging that never probed Thursday’s test of 2677.00 resistance, but also not rejecting it. Post-open action didn’t probe higher either, never stretching the rubber band. So, a drop to 2658.00 lacked the momentum of a rubber band snapping back. The drop was retraced almost as quickly. The balance of the session copied the overnight pattern and ranged sideways, never probing 2677.00 resistance, but also not rejecting it.

Overnight action’s new info…
A delayed open seemed to have a lot of pent-up buying pressure. Spiking up 9-10 points from Friday’s 2669.00-2671.50 close was retraced quickly. Then it was recovered gradually. And extended, for awhile. Attacking 2681.00 was later improved to 2682.25, and its reaction down is attacking the 2677.50 interim low.

If, then…
Without rejecting the ongoing test of 2677.00 on a timely basis, fresh highs became more possible. Now they’re being tested, above 2681.00 and not quite attacking 2684.25. Fresh highs are still vulnerable to reversing down, albeit a little less so, and probably not if maintained much past noon. Extending higher would target 2693.00 and 2703.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2681.00 would be likely to trigger the 2678.25 bias-up signal at 10:15. Exiting the open under 2674.00 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…
Thursday extended Wednesday’s rally with the help of an early start after Wednesday’s close. Its push up to 2655.00 into the Globex open was corrected overnight and recovered into Thursday’s open. A shallower post-open dip was quickly recovered to resume the rally. Its potential up to 2677.00 was exploited almost entirely at the afternoon’s late high, gaining traction for its effort. The final hour’s dip met and held its 2664.00 target before firming 2-3 points into the cash session close. Futures retraced the rest on the way to 2677.50.

Overnight action’s new info…
The catalyst for recovering from Thursday’s late dip was AMZN earnings. AMZN soared to new highs, but S&Ps pulled back to test and retest 2666.00, resisted by 2672.00 above — the upper-end is being retested now. The hot-and-cold relationship shouldn’t be surprising. The period before individual equity earnings events are mostly inhibiting to the broader market, which the late pullback expressed. The dip rid the market of weak longs and trapped shorts, while injecting a bit of contrarian pessimism. The period before individual equity earnings events are rarely influential to the broader market, which the overnight range has expressed.

If, then…
Probing fresh highs this morning was already likely when yesterday’s final hour was entered above its bias environment highs. That completed a setup, indicating that the rally had gained traction for its efforts. Holding the late dip to its 2664.00 target helped by correcting the rally. The intraday rally had stopped short of its 2677.00 potential, which also helped. The post-close surge that fulfilled the potential was too late to matter. Unless the open fails to hold a retest of 2664.00, and triggers bias-down. Otherwise, slightly higher fresh highs remain likely this morning. And fresh highs this morning remain vulnerable to being reversed down through the afternoon. Until reversing down, fresh highs this morning would be vulnerable to extending higher into the weekend, next targeting 2693.00 and 2703.00.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2664.00 would be unlikely to trigger the 2661.50 bias-down signal at 10:15. Exiting the open above 2777.00 would be likely to trigger the 2671.25 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…
Tuesday’s choppy overnight range had tried at first to extend the afternoon’s bounce to 2640.00, only to eventually try defending against extending Tuesday morning’s plunge to 2616.00. Wednesday’s flat open at 2632.00 did initially plunge to probe fresh lows at 2611.00, but that action was isolated to the opening 15 minutes of volatility. The balance of the session trended up, including a midday flat-to-higher range resisted by 2636.00. A late surge to 2644.00 was retraced 14 points and then recovered ahead of Facebook’s earnings.

Overnight action’s new info…
Favorable reaction to FB earnings extended Wednesday’s late recovery to attack 2655.00. A narrow consolidation there broke lower through midnight, testing 2640.00 into Europe’s opens. Stopping 1 point short of yesterday’s cash session close was enough to launch a bounce back into the earlier consolidation up to 2652.00.

If, then…
A basic poker betting strategy is called the “Continuation bet,” or c-bet. It refers to the lead bettor of the first round leading out on the second round, regardless of whether his hand improved. It’s often a bluff, but the c-bet shakes out weaker hands anyway. Similarly in markets, one session’s trending tends to extend into the following day, a c-bet regardless of it being momentum or actual accumulation. Overnight action has held up yesterday’s late surge, although we already know yesterday’s low doesn’t qualify as a completed bottom. Its initial follow-through was brief, and its eventual retracement was shallow, both of which are indications of excessive optimism. If maintained through Thursday’s open, then a morning rally would get every benefit of the doubt. But another round of betting precedes the open, and it is a reliable catalyst for volatility — the ECB policy statement and Mario Draghi press conference.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2650.50 would be likely to trigger the 2645.75 bias-up signal at 10:15. Exiting the open under 2640.75 would be unlikely to trigger bias-up.