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…
Thursday’s Isolation setup had been confirmed into the weekend, signaling follow-through. Sunday night’s opening surge and Monday’s gap up acted accordingly. The open’s rally got a little ahead of itself by quickly fulfilling the morning’s 2766.50 bias-up target. But a late rejection of the 2757.00 bias-up signal only dipped to 2753.00 before resuming the Isolation setup’s rally. The balance of the session rallied relentlessly up to 2780.00 — fully recovering a last-minute dip to 2774.00 into the cash session close, and then surging another 5-6 points into the Globex open.

Overnight action’s new info…
Yesterday’s last bit of enthusiasm has been retraced, but not yet reversed. Monday’s late surge never extended any higher. It initially consolidated, with errant ticks touching 2787.00. Finally breaking lower briefly touched 2775.50, a 6-point blip-up into Europe’s opens was retraced entirely down to the low. And now lower to attack yesterday’s late 2774.00 low.

If, then…
Was Monday’s optimism immediate, relentless, or excessive? The correct answer is “D”, all of the above. Surging 13 points through yesterday’s close is representative of the entire session’s 32-34 point rally. Its excess wasn’t identified until overnight action retraced the last surge. So, is the overnight retracement beginning to reject yesterday’s optimism, or only correct it? This correct answer here can be only one, or the other. And if the overnight dip is only a correction — whether or not yet complete —  then it is healthy for extending the rally higher today. Extending higher relies first on the market getting what it wants from the new Fed chair’s testimony. That could get tricky, as his 10:00 remarks may not be embargoed past 8:30 and his 10:00 appearance could discover that any positive reaction is already done. And if the remarks don’t give the rally what it wants, then its resumption would likely be detoured further by a deeper dip back down to yesterday’s morning’s “lower prior highs.”

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2771.25 would be likely to trigger the 2774.00 bias-down signal at 10:15. Exiting the open under 2780.00 would be unlikely to trigger the 2781.00 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…
The weekend’s impending illiquidity neither rejected Friday’s gap up to 2718.00, nor caused its rejection. Friday Factors didn’t seem influential at all through the first hour’s 2713.00-2723.00 range, or the morning bias environment’s rally attacking 2730.00 resistance. But Friday Factors were likely to be influential at least once, and their illiquidity was getting exponentially closer every minute while the afternoon bias environment coiled back up to resistance. The balance of the session broke higher almost 20 points to attack 2750.00, 5 points short of the prior Friday’s 2755.00 high. Closing above Thursday’s 2731.00 high alone was enough to confirm its Isolation setup’s reversal remained intact.

Overnight action’s new info…
Sunday night’s open spiked up to attack the prior Friday’s 2755.00 high within 1 point. Adding another 3 ticks reacted down 12 points to test 2743.00. Most of which was recovered by eking higher through midnight. Consolidating into Europe’s opens broke higher again, probing fresh recovery highs up to 2761.50.

If, then…
Completely retracing the prior week’s 2755.00 high was the reward for having contained its pullback to tests of 2701.50. The pullback included Wednesday night’s dip to 2782.00, which was isolated by Thursday’s open back above Wednesday’s lows. Even if the Isolation setup wasn’t confirmed until Friday, its likelihood for multiple sessions of follow-through still gets a benefit of the doubt. Regardless of any confidence in extending the bounce, be mindful that the 1987-style crash pattern’s analog is within days or hours of its final bounce’s peak. No analog is perfect in both its price and time measurements, as we discussed during this weekend’s Saturday Review. Only structure matters. So, the current bounce’s next higher objectives at 2813.00 and 2825.25-2827.75 are in-play on a close above 2857.00, and so long as upside momentum keeps in mind Satchel Paige’s most famous saying: “Don’t look back. Something might be gaining on you.”

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2753.25 would be unlikely to trigger the 2757.00 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 open back within Wednesday’s range had isolated the probe under Wednesday’s lows to the overnight. This Isolation setup was completed when the opening 15 minutes of volatility had maintained the recovery and also trended up. Its 12-13 point surge to 2723.00 reacted down to 2708.00 and still managed another upleg to fresh highs that touched 2731.00 at noon. Then the three-day old pattern of rejecting early strength resurfaced. The balance of the afternoon trended back down, probing under the morning’s lows down to 2696.50. But that was still within Wednesday’s range to avoid invalidating the Isolation setup, albeit barely. Closing action bounced to close 2-4 points above the critical 2701.50 level that still allows this week’s decline to be considered a pullback from last Friday’s high.

Overnight action’s new info…
Thursday’s late bounce didn’t delay extending higher through the Globex open. Its first consolidation developed from just under 2715.00, and extended to attack 2728.00. Europe’s opens were greeted several points lower, on the way down to 2713.00, which has since bounced more than 10 points to attack 2724.00.

If, then…
The Isolation setup remained in-play yesterday by Wednesday’s lows holding as support. The fourth consecutive afternoon rejection of early strength failed to end in negative territory, also keeping the door open to reversing the recent trend. Of course, not recovering Wednesday morning’s 2716.00 low wasn’t optimal, but gapping up today could cure that by proxy. Last night’s bounce could be the beginning of the next upleg if it’s maintained above relevant resistance through the open — preferably above Thursday afternoon’s 2720.00 bias environment high or even Thursday’s 2731.00 noon high. And now having rallied overnight, a post-open rally would be doubly bullish for not attracting sellers and for still ignoring the four-day pattern of early rallies being rejected. Which necessarily means that not extending higher through the open could be doubly bearish. Fresh lows may be only a formality. More so, fresh lows would all but destroy the temporary pullback’s limited measurement. Friday Factors are likely to leverage either setup, whether to squeeze a post-open rally into a bigger recovery, or to help post-open sellers break through prior lows.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2720.00 after touching it post-open would be unlikely to exceed the 2721.00 bias-up signal through 10:15 or to renew the bias-up signal. Exiting the open above 2715.00 would be likely at least to trigger the 2712.00 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…
Wednesday’s open was greeted at the overnight range’s upper-end. A choppy, wide overnight range, indicating flip-flopping between polarized opinions. a Tuesday afternoon’s sellers had gained traction, so not gapping up above a prior high would doom to failure any rally attempt. The open did rally, and then the morning, and finally the knee-jerk reaction to the afternoon’s FOMC Minutes, totaling 23 points from the open up to 2747.00. The bias environment exit reversed polarity, apparently delivering quite a shock as the balance of the session plunged 47 points to test the next lower objective down to 2700.00.

Overnight action’s new info…
Extending down to 2693.50 through the futures close initially fell further to 2682.00 through the Globex open. Gradually recovering through the night greeted the Globex opens back at 2693.50. Cautious strength has gotten more daring, now having extended up to 2708.75. That’s back above Tuesday’s late low, and stretching the room for noise around a 61.8% retracement of yesterday’s last downleg (the post-position-squaring window). It’s resistance.

If, then…
Haven’t three consecutive rejected early rallies yet conditioned the market not to rally early? It seems that one of Pavlov’s dogs has gotten loose overnight, but he’s only reached the property’s fencing — resistance being tested by this overnight bounce. This could become an Isolation setup, by greeting Thursday’s open back within yesterday’s range and thereby isolating the probe under its lows to the overnight. Isolation setups tend to be durable reversals. Pavlov’s dog won’t hear the open’s bell if he’s already escaped over the fence. Ending the pullback from last week’s highs, whether to retrace the pullback or to resume the rally, in either case would rally today. Otherwise, not triggering the Isolation setup after fully forming it could be as bearish as the setup would have been bullish.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2709.00would be unlikely to trigger the 2710.25 bias-up signal at 10:15. Exiting the open above 2701.50 would be unlikely to trigger the 2695.00 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…
Trending down through the weekend to eventually touch 2709.00 didn’t affect whether the bullish WedEX could influence Tuesday morning. In fact, gapping down to 2721.00 surged 11 points through the open to maintain the signal. A lengthy 14-point pullback resolved in a 20-point upleg to test 2737.50 into noon to fulfill the signal. WedEX’s influence ends there, which the balance of the session made obvious by sliding to fresh lows at 2705.75. Sellers gained traction through the bias environment exit and the final hour’s entry, before closing action bounced to touch 2720.00. Overbought RSIs at the high printed just after noon to avoid requiring a retest, while oversold RSIs at the afternoon’s low require a retest.

Overnight action’s new info…
Initially firming slightly further up to 2721.50 suddenly collapsed before midnight, attacking yesterday’s low to within 2-3 ticks. A shallower bounce was still sizable, attacking 2719.00 before collapsing again to attack the low. The range has continued narrowing around 2714.00.

If, then…
Regardless of whether last week’s rally was only a temporary corrective bounce, it’s premature to pronounce its passing — let alone the previous decline’s resumption. Yesterday afternoon’s traction and oversold RSIs at its low haven’t been neutralized overnight, so the reversal attempt has no excuse not to become more obvious today. Not already rallying overnight makes the open unlikely to gap up enough to neutralize the afternoon’s traction. Satisfying its fresh lows, retesting oversold RSIs, and holding the next lower objective still could launch another upleg. The afternoon’s FOMC Minutes may prove instrumental to the market choosing its next direction.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2711.00 would be unlikely to trigger the 2709.50 bias-down signal at 10:15. Exiting the open under 2707.00 would be likely to trigger bias-down.