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 choppy ranging had developed exclusively in negative territory, back-and-forth within Friday’s late surge, and below it down to 2664.00. Monday’s first hour was less adventuresome, ranging even more narrowly. But at the last possible minute a Dry Cleaners morning signal was avoided by surging back to unchanged at 2690.00, and through it to test the morning’s 2699.00 bias-up signal. Extending higher into and out of the noon hour eventually tested the 2725.25-2727.75 corrective bounce peak described during this weekend’s Saturday Review. The close drifted down to 2717.00.

Overnight action’s new info…
In a throwback to the golden years of two months ago, an unusual 5-point wide range was maintained for hours. Yesterday’s late pullback to 2717.00 held throughout, resolving up to greet Europe’s opens attacking 2727.75. Another 5-point consolidation was resolved more aggressively by surging to 2734.50. Its reaction has dipped back down to 2727.75.

If, then…
Overnight support was apparently a function of last week’s tariffs losing credibility. Overnight gains are apparently a function of a North Korea disarmament talks overture. Whatever the story behind it, this price action is consistent with the bearish scenario of probing yesterday’s highs before failing — whether probing higher this morning and failing this afternoon, or already failing through the open. The bullish scenario departs from the bearish scenario by not rejecting the higher probes. Negotiating the range between yesterday’s close and its highs at 2718.00-2728.00 could be the difference between rallying and reversing.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2725.25 would be unlikely to trigger the 2727.75 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 fresh low was likely for having trended down through each of the three prior sessions. Friday’s potential for trending down into the weekend was likely for similar reasons, and for being a Friday when the weekend’s impending illiquidity can exacerbate sentiment. The early bearish sentiment was contained to testing its 2652.00 bias-down target by 5 points. But the contrary sentiment was limited to returning to unchanged around 2677.00 by noon, and ranging there choppily until exiting the proxy window at 3:20. Surging 25 points to test 2695.00 into the close did not recover any relevant level to reverse the trend up, and its catalyst seemed only to be earlier shorts covering ahead of the weekend.

Overnight action’s new info…
Sunday night’s gap down quickly touched 2677.00 and a couple of points lower, confirming that Friday’s late surge wasn’t necessarily bullish. Bouncing nearly filled the gap back to Friday’s 2690.00 close before reversing into a slide that eventually tested 2664.00. The slide not only ended at Europe’s opens, but also began reversing back up, briefly probing Friday’s close to almost 2692.00. the past hour has drifted back down 13 points.

If, then…
Immediately retracing Friday’s late surge last night does help to prove it wasn’t bullish. But having retraced it, resuming the recovery can suggest new sponsorship has arrived, after all. Resuming the rally by triggering bias-up, preferably by already exceeding Friday’s late high through the open. Rejecting a probe above Friday’s late high through the open would keep the door wide open to trending back down today.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2685.00 would be unlikely to trigger the 2674.00 bias-down signal at 10:15 — at least, not without first touching the 2699.00 bias-up signal. Exiting the open under 2685.00 would be unlikely to trigger the 2699.00 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…
Thursday’s decline wasn’t immediate. At least, its immediate attempt at declining was recovered to probe fresh session highs in positive territory. But the morning bias environment resumed the decline, which extended relentlessly through the afternoon. The foregoing actually describes Tuesday and Wednesday, too. But Thursday was the first to revisit the prior week’s lows, which had held a test of 2701.50, and which there was no bullish reason to revisit. Last Wednesday night’s 2682.00 low of that original test was revisited, too. The afternoon bias environment’s 2758.50 low was retraced by a late bounce up to 2689.00, ending the day at 2776.00-2778.00.

Overnight action’s new info…
Initially firming attacked 2685.00 before reacting back down to 2669.00. Europe’s opens didn’t fall apart, and 2685.00 was attacked again. It also reacted back down again, but more substantially to within tick of yesterday’s 2658.50 low. A couple of bounces individually and thoroughly tested what is this morning’s 2666.00 bias-down signal’s resistance. Resistance won, producing a probe under yesterday’s low by at least 1 point.

If, then…
After three consecutive sessions of trending down sharply, today’s session is shaping up to be just another day. Which doesn’t necessarily mean a fourth consecutive session of trending down sharply. But two days of impending illiquidity is introducing Friday Factors into the equation. So today’s fourth session should either trend down sharply on steroids, or else reverse up sharply at some point. The 3-week old low is an example of the latter, which reversed up sharply from a very late test of a prior low. The nearest similar support under yesterday’s lows isn’t encountered until 2634.00 and more likely 2620.00. And another late Friday save that reverses up sharply is always the least likely resolution. Let’s assume Pavlov’s work is complete, and no early bounce develops today — which we’ll assume so long as positive territory is avoided or rejected within minutes. Trending down sharply can meet one or both of those levels without reversing up, and still leave some steroids for Sunday night and Monday to continue tracking the 1987-style crash template.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2673.25 would be unlikely to trigger the 2666.00 bias-down signal at 10:15. Exiting the open under 2663.50 would be likely 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…
Ranging sideways overnight had briefly probed under Tuesday’s intraday lows, but Wednesday’s open gapped up. The gap up was immediately retraced, but not enough to probe back under Tuesday’s lows, forming the basis of an Isolation setup. The bias-up signal triggered, too, after already having come within 2 points of its target. Both setups were invalidated — by probing back under Tuesday’s lows and by exiting the bias environment under its bias-down signal, respectively. Neither rejection equated to a sell signal, but an afternoon recovery back into positive territory ended when the bias environment began lapsing. The balance of the session plunged 47 points to retrace almost all of the past week’s rally.

Overnight action’s new info…
The late intraday plunge to 2712.00 was initially consolidated back up to 2722.50. Another smaller collapse suddenly fell to 2703.00, which began another consolidation through midnight. A hopeful rally back to the earlier highs greeted Europe’s opens. But hovering there narrowly for another hour wasn’t hopeful enough to avoid sliding back down to the overnight lows. And now lower, having just touched this morning’s 2698.25 bias-down target, where last Wednesday afternoon’s plunge had closed.

If, then…
For all of the recent selling, a new downleg hasn’t yet been triggered. There certainly are reasons to suspect that sellers are stronger-handed. Such as, rejecting the bias-up three times in two days, which is distributive but not a trigger. Retesting the original pullback’s 2701.50 limit — whose test last week had reacted up into Tuesday morning’s high — isn’t necessarily bullish, but it’s not bearish without closing below it. And now the same can be said of a recovery. While yesterday’s renewed selling may be no more than pessimism ahead of Fed chair Powell’s Senate testimony today, a relief rally after he appears won’t be enough to suggest the recent low’s retest has held. The only early reliable setup from the overnight pattern would require the open to probe above its 2722.50 high. Anything shallower will remain vulnerable to probing lower intraday, regardless of its resolution.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2701.50 would be likely to trigger the 2707.50 bias-down 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…
Tuesday’s drop was not immediate, but its delay was brief and its resolve was relentless. Monday’s rally can be characterized similarly. Optimism ahead of the new Fed Chair’s first ever congressional testimony had been largely discounted. Tuesday’s outside day finished the discounting early by adding 9-1/2 points above Monday’s cash session high up to 2789.75. Did it also overly-compensate by eventually probing 9-1/2 points under Monday’s low down to 2743.50?

Overnight action’s new info…
That over-compensation shrank before it got wider. And then it shrank again. Firming to 2754.50 was rejected by a dip to fresh lows at 2738.50. Recovering steadily through midnight persisted into and out of Europe’s opens until touching the earlier high. Now its reaction down to 2746.00 has formed an inverted Head & Shoulders pattern.

If, then…
Yesterday’s dip had been consolidating at or above its lowest projected support at 2749.75, until coming to within 3 minutes of the cash session close. A last-minute dip contains the session’s lower lows, which tested “lower prior highs” at 2743.00 through the futures close. Both of these relevant levels have yet to be broken during a relevant intraday timing window. Which would likely extend yesterday’s downtrend through this morning. Otherwise, maintaining an open above yesterday’s lows — then extending it through the open — could form an Isolation pattern to reinstate another multi-session rally. Meanwhile, the overnight Head & Shoulders influence must be obvious during that same initial 15 minutes of volatility to be influential intraday. This is equally true for any overnight pattern’s influence, and a Head & Shoulders pattern’s influence can be bullish or bearish, with specific measurements targeted in either direction. And extending down to the lower targets would be in-line with the 1987-style crash template that’s still tracking.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2753.25 would be unlikely to trigger the 2755.75 bias-up signal at 10:15. Exiting the open under 2740.75 would be likely to trigger the 2744.50 bias-down signal.