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…
Rallying sharply early Monday night had retraced all of Monday afternoon’s 43-point collapse up to 2658.00. Its reaction down to 2638.00 defined the trading range that would last through midnight, and intraday Tuesday — albeit widening along the way to 2635.00-2666.00. No traction was gained for the effort, especially when trending became unlikely during Zuckerberg’s congressional testimony. There was enough optimism to try breaking higher, but the overnight highs held.

Overnight action’s new info…
Probably in reaction to reports of an impending Syria strike, the first Globex move attacked the range’s lows down to this morning’s 2640.25 bias-down target. And then stopped for a long time, hovering optimistically short of yesterday’s intraday lows. Ranging narrowly up to 2644.00, for hours and hours, and well after Europe’s opens did eventually blip-down momentarily to 2637.00. That proved to be a warning shot, as price has collapsed to 2626.00, well under yesterday’s lows, presumably still anticipating intervention in Syria.

If, then…
Having gained no traction for its efforts Tuesday, extending the rally Wednesday required gapping up. That’s not happening. Meanwhile, the likelier scenario of retracing Monday night’s recovery is playing out. Greeting Wednesday’s open under range’s lows isn’t in itself bearish, unless maintained through the open. Any trending likelier earlier rather than later. Price action can become inhibited ahead of the afternoon’s FOMC Minutes. But even its impact may be muted unless containing a glaring surprise to influence price action. Traders may again be distracted by Zuckerberg’s second congressional appearance. Between his likely adaptation after yesterday’s round, and today’s crew trying to one-up yesterday’s inquisitors, promises to offer more gotcha’s on either side of the witness stand.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2637.50 would be likely also not to recover the 2640.25 bias-down target by 10:15, renewing the bias-down signal. Exiting the open under 2644.00 would be likely at least 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…
Monday’s gap up to 2619.00-2620.00 reacted down to 2613.00 before reversing up sharply. And a lot. For awhile. Trending up didn’t peak until the afternoon bias environment attacked 2654.00. Then it was all retraced back down to 2610.00 at the close. Friday’s last-minute high was overlapped by almost 2 points, but the gap back down to Friday’s 2603.00-2606.00 close wasn’t even attacked, let alone filled.

Overnight action’s new info…
Globex initially consolidated up to 2620.00 for several hours, then suddenly broke higher during Chinese Premier Xi’s speech. This morning’s 2625.75 bias-up signal and 2635.25 bias-up target each enforced a consolidation. And each consolidation resolved up, eventually surging 4 points through yesterday’s high to 2658.00. Reacting down to 2638.00 held through midnight, defining a range that has contained price action since then.

If, then…
The overnight rally is not surprising, other than its size. I had noted at yesterday’s close and in the Market Wrap that Monday’s drop wasn’t necessarily bearish, and the burden of proof was on sellers. Stopping short of filling the Friday’s gap is not “ineffectual optimism,” because so much of Monday afternoon’s drop developed so late. And sellers didn’t gain traction for their efforts, with only the proxy window trending down. Also, even the session’s 44-point collapse developed in positive territory. Now, about the size of the overnight rally. Already retracing back to Monday’s highs all but requires a rally to probe higher through the open, or else the morning’s high will be in. Perhaps even the session high, as traders turn their focus to the televised spectacle of Facebook’s Zuckerberg giving congressional testimony.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2640.75 would be likely also to exceed the 2635.25 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 2630.75 would be likely at least to trigger the 2625.75 bias-up signal at 10:15.

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 session was preceded by an overnight drop, and the open was greeted in recovery mode. That was nothing new for the week, not until the recovery failed, miserably. Thursday night had initially plunged 40 points on China tariffs news from its 2662.25 intraday close. That was retraced only to 2648.00 pre-open, and then almost to 2657.00 through the open. The balance of the morning reversed back down to within 5 points of the 2620.00 overnight lows. The flat-to-lower noon hour resolved down sharply to 2584.50 — down 78 points from Thursday’s close. The final hour bounced to 2611.00. No “unfinished business above” was left outstanding, having rejected the Wednesday-Thursday test of 2644.00 and 2660.00.

Overnight action’s new info…
Sunday night’s gap up immediately recovered Friday’s last-minute reaction down from 2611.00. The gap up extended higher to test 2625.00 by midnight. Narrow ranging into Europe’s opens blipped down to attack 2615.00, then blipped-up to attack and test 2628.00. But its reaction down is now attacking 2618.00.

If, then…
The relentless overnight rally is relative shallow, and still contained by the range of Friday afternoon’s collapse. It has gotten into position for more easily recovering a relevant level — like Friday afternoon’s 2634.00 bias environment high — which would be bullish if recovered through the open. Meanwhile, however, the likely alternative to extending higher is not only to retesting Friday’s low but trending through it.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2612.00 would be unlikely to trigger the 2620.00 bias-up signal at 10:15. Exiting the open above 2621.50 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…
Wednesday night had rallied through Europe’s opens to attack 2668.00. Reacting down to 2552.00 defined the balance of price action overnight, and through Thursday’s close. The sideways session’s only expressions of sentiment were separate rallies to 2672.00, and their two reactions down. The separate rallies each failed to extend, while their reactions down fulfilled targets. Bouncing off of the targets formed “V” bottoms that never paused to allow any accumulative behavior. Fluctuating around 2660.00 resistance was ongoing into the close, undermining whether a next higher objective was put into play.

Overnight action’s new info…
Markets are usually constrained ahead of an Employment Situation report. Last night’s Globex started that way. It had barely begun trading, and could barely be characterized as trending, when it got ambushed by a $100 million tariff on China. Plunging 40 points within 15 minutes fell to 2620.00. Reacting up to 2637.50 into and out of midnight formed an Ascending Triangle. Already breaking higher to 2644.00 ahead of Europe’s opens has extended to attack 2649.00. Its reaction has fallen back down to the triangle’s 2637.50 upper-end as support, probably sparked by headlines that China is within 1-2 hours of announcing its retaliation.

If, then…
Will Thursday night’s plunge set a pessimistic tone for the day, or will its excessive pessimism prove bullish from a contrarian perspective? Tuesday night’s 57-point slide scared a lot of market participants, yet it was reversed well above its origin intraday Wednesday. Will that pattern repeat today? The influence of Friday Factors on sizable overnight moves tends to exacerbate them as weekend illiquidity fast approaches. The question is whether that influence will be applied to the overnight drop, or to a post-open recovery attempt. Meanwhile, Wednesday closed barely under 2644.00 and Thursday closed barely above 2660.00. Closing back under both on Thursday would have signaled the trend reversing down. That applies equally on Friday. The overnight plunge to 2620.00 seems to make that easier, but so did Tuesday night’s 57-point slide. Anyway, closing under 2644.00 or above 2660.00 would likely be by a wide margin.

First Trade…
[Click here to view the Bias parameters] No preliminary levels are considered ahead of an Employment Situation report.

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…
An overnight Symmetrical Triangle’s false break was already reversing back up pre-open from 2559.50. Wednesday’s open extended the reversal more substantially, all but ensuring the overnight plunge would not resume. It did not. Sellers were never actually marginalized intraday, but they would be influential again only during the noon hour’s exit into the bias environment, dropping from 2620.00 to 2601.50. That ended abruptly as the rally extended sharply higher to almost 2650.00 into the final minutes. The actual cash session close held 2644.00.

Overnight action’s new info…
Slowing the pace of yesterday’s rally hasn’t stopped it. A reaction down from 2660.00 to 2653.00 was recovered to 2667.00, which also reacted down to 2653.00. Its recovery to 2660.00 is forming a potential Head & Shoulders pattern, and also reinforcing the relevance of 2660.00.

If, then…
Extending any higher would seriously undermine the near-term downside momentum, especially if maintained through today’s close. Significant retracement limits are being tested, both at yesterday’s close back under 2644.00 and at the overnight probe above 2660.00. Closing above both today would enable a higher objective at 2722.00. Meanwhile, having tested 2660.00, closing back under 2644.00 could act as an accelerant to reverse momentum down aggressively into the weekend — and out of it… Meanwhile, the potential Head & Shoulders pattern forming overnight has yet to break lower, and may not. Regardless, its intraday influence will be defined during the opening 15 minutes of volatility.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2660.00 would be likely to exceed the 2656.25 bias-up target at 10:15 to renew the bias-up signal. Exiting the open above 2650.00 would be likely at least to trigger the 2647.50 bias-up signal at 10:15.