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…
Sunday night’s rally had all but peaked nearly 4 hours before the open. Touching, testing and probing 2634.00 had reacted down to 2626.00-2627.00 each time. One final time through Monday’s open also reacted down, but much more substantially to 2602.00. That was the morning’s bias environment. Recovering into and out of the afternoon bias environment extended sharply higher to 2662.50, probing above Friday afternoon’s ~2650.00 high. Friday morning’s 2658.50 high was still being tested at the close.

Overnight action’s new info…
Monday afternoon’s rally soon resumed after the Globex open. And it has only extended higher, including an Ascending Triangle at 2672.50 that resolved up to 2678.50 through Europe’s opens. Now a fresh high attacking 2680.00 has reacted down to test and retest 2672.50 as support.

If, then…
The reward to recovering yesterday morning’s high was a retest of Friday afternoon’s ~2650.00 high. And the reward to recovering that is a retest of two prior highs up to 2691.50. That was more than 40 points higher when 2650.00 was being tested, and now it’s only 12 points higher. The recovery is already 94 points above Friday’s late low, which is a little faster-paced for the rally than for the decline. The differential isn’t wide enough to label the rally as a “bear market bounce,” but surging beyond the open would could make the afternoon vulnerable to reversal. However, a post-open dip would be difficult to resume the rally if not absorbed quickly.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2675.00 would be likely also to exceed the 2671.00 bias-up target at 10:15 to renew the 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…
Thursday night’s 2626.00 lows had been probed momentarily by 9 points. A pre-open bounce had tested 2658.00. The open’s potential Isolation setup failed Rather than establish a range, the wide swings released their energy at Friday’s 2650.00 open through its 2588.00 cash session close. Futures bounced 9-11 points into the weekend. Nearly two weeks of decline had finally returned to the original downleg’s 2694.75 intraday low, which is still the Pivotal Low — i.e. the low prior to the actual low.

Overnight action’s new info…
The word over the weekend was that progress is being made in negotiations on trade with China. Nothing definitive, but it was enough for one of the worst intraday drops to re-open only slightly down at 2595.00. At first, the overnight crowd was tentative. Dipping a couple of points was recovered to a fresh post-open high. It reacted down to a fresh post-open low at 2591.00, just 5 points from from Friday’s low, and certain oblivion below it. But the next hour eked its way back up to post-open highs. And continued. Extending higher overnight to 2636.00 has been ranging back down to Friday morning’s — and Thursday night’s — 2626.00-2627.00 lows as support.

If, then…
This is not a durable recovery. It might be the beginning of a bottoming pattern, which I doubt, but that would require holding a test of the gap back down to Friday’s close. And double-digit overnight rally must produce another double-digit leg to even attack Friday’s last relative highs. Still, the overnight reversal could extend intraday if its recovery above 2626.00-2627.00 is maintained. Similar to an Isolation setup, the interim price action can fuel a short-squeeze. Alternatively, relentless overnight trending often reverses its trend at the open. Regardless, the opening 15 minutes of volatility tends to establish either of these two setups, so we should know today’s direction early.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2627.00 would be likely also to exceed the 2624.50 bias-up target through 10:15 to renew the 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…
Wednesday night’s drop had already probed fresh lows for the week, which hadn’t happened the two prior sessions. Thursday’s open gapped down 27-30 points to probe under Monday’s 2698.00-2699.00 lows. A post-open bounce finally ended upon touching Monday’s low. and the balance of the morning trended down to 2664.00. Another bounce to 2690.00 also resolved down to 2643.00-2644.00. That met the next lower objective under 2680.00 at 2652.00. Closing under it put into play its next lower objective at 2627.00.

Overnight action’s new info…
Trying both to resume the drop, and to reverse it, and failing at both. Thursday’s drop extended without delay to fulfill its next objective down to 2626.00. Consolidating eventually broke lower and quickly touched 2617.00, but it was recovered almost as quickly as it had formed. This time, consolidating again around 2626.00 reversed up sharply into Europe’s opens and touched Thursday’s late 2643.00-2644.00 lows. It also reversed back to 2626.00. Now another bounce is testing 2639.00.

If, then…
Several important points about price action since yesterday’s close. First, it has met the next lower objective. Second, it is in proximity to yesterday’s range. Third, it has developed exclusively under yesterday’s lows. The first two points allow an Isolation setup to form, by opening back above yesterday’s lows and avoiding negative territory through the open. The third point must be invalidated first, by probing back into yesterday’s range well before the open. An alternative recovery path would continue being governed by pessimism and retest the overnight low, but maintain or re-establish the range when the bias environment had lapsed. Friday Factors could squeeze shorts into the weekend. Nevertheless, dangers loom. Isolation setups can be as bearish as they would have been bullish, if they fail to hold within the prior day’s range. And Friday Factors can cut either way, so buyers can become increasingly inhibited the longer a recovery is delayed. Regardless, this being a Friday, the morning’s bias tends to persist through the noon hour. So, almost literally, make or break. Closing under 2652.00 again Friday would confirm the next lower objective in-play, a retest of the crash’s lows at 2509-2511.00. Support along the way would be influential, but likely only temporary.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2639.75 would be likely to trigger the 2640.75 bias-down signal at 10:15. Exiting the open above 2652.00 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…
Wednesday morning’s no-no-bias environment avoided triggering its 2719.00 bias-down signal, and surged through its 2725.25 bias-up signal to 2734.00. The no-bias trending was retraced before the FOMC news, which triggered a 12-point knee-jerk reaction up to 2744.00. Which triggered a 20-point collapse. Both within 5 minutes. Wide swings persisted as fresh lows were probed down to within ticks of the morning’s 2712.25 bias-down target. A 21-point bounce was mostly retraced into the close down to 2714.25. Oversold RSIs at the low require a retest. Tuesday morning’s “unfinished business below” at 2710.25 is outstanding, too.

Overnight action’s new info…
So much for Wednesday’s volatility. Right? Firming steadily into the Globex session recovered to test the lower-end of 2726.00-2727.00. Its reaction down attacked 2718.00 before trying to recover, but peaked at 61.8%. Reacting down again greeted Europe’s opens back at yesterday’s late low. And then lower. And then a lot lower. Collapsing sharply lower finally bounced back up to 2707.50, what is this morning’s bias-down target. A retest of the low down to 2696.00 reacted up to 2701.50, and ranged sideways at the lows.

If, then…
Attractions at yesterday’s 2712.75 low and Tuesday morning’s 2710.25 bias-down signal are neutralized. Isolating their tests to the overnight could have launched a multi-session recovery of the pullback from last week’s highs. That’s still possible, since tests of 2701.50 have been holding. Repeatedly. Recovering again in this setup all but requires opening back above yesterday’s lows, if not also in positive territory and then holding above yesterday’s lows. Trying, and failing, could prove even more bearish than not trying at all. And not holding the retest of Monday’s lows would threaten to expose an air pocket not much further below.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2711.50 would at least be likelier to trigger the 2713.00 bias-down signal at 10:15. Exiting the open under 2706.00 would be likely also not to recover the 2707.50 bias-down target which would then renew the bias-down 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 2720.25 open was flat with Monday’s futures close. Both were above Monday’s cash 2716.25 session close, which had been touched twice overnight. Interim bounces had tested the 2726-2727 target created by Monday’s close above 2711.50. The open pierced fresh highs up to 2729.00, and reversed down again, early enough not to trigger the bias-up signal. The morning’s bias environment exit only got to within 3 points of fulfilling an offsetting test of its 2710.25 bias-down signal. The afternoon bias environment got a few ticks closer. Both dips reacted up, settling at 2723.50. The cash session closed 3 points lower, essentially unchanged from the opening print.

Overnight action’s new info…
Price action since yesterday has been volatile, not narrow, but still undecided. Dipping into Tuesday’s close had triggered a pattern with potential down to 2716.25. It was barely attacked to within 2 points. Firming into the close extended into the Globex open up to 2725.50. Its reaction down to 2721.00 was recovered entirely, and higher to attack 2728.00. A 10-point drop has bounced 6 points off of 2718.00 to now test 2724.00, essentially unchanged from yesterday’s cash session close.

If, then…
While yesterday afternoon’s low provided a sizable bounce, it was contained within the session’s previous range. This reinforces the range’s boundaries for containing noise, by making it more difficult to attract sponsorship for trending out of the range. Greeting the open within the range can still trend quickly to try gaining some traction, which is already difficult ahead of Wednesday afternoon’s FOMC events. The range is wide, so an early trending attempt that doesn’t trigger a bias signal still has plenty of room for reversal before paralyzing anxiousness sets in. But volatility after the policy statement and during Fed Chair Powell’s first quarterly Q&A should help to compensate for the interim constraint.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2627.00 would be likely to trigger the 2725.25 bias-up signal at 10:15. Exiting the open under 2724.00 would be unlikely to trigger bias-up. Exiting the open above 2720.50 would be unlikely to trigger the 2719.00 bias-down signal. Exiting the open under 2716.25 would be likely to trigger bias-down.