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…
Friday’s open gapped down 16 points to 2806.00, fulfilling the next lower objectives at 2805.00.That was 14-15 points above the pre-open low, which the first half-hour probed down to 2889.00. If not rejected into the noon hour, then the next lower objective at 2766.00 would be in-play. The relentless slide met it, and its room for noise down to 2760.00 at the cash session close. Post-close action spiked down to 2755.25. All of which retraced January’s rally by 61.8% back down to December’s ~2700.00 highs, reversing the first week of the annual earnings onslaught.

Overnight action’s new info…
Extending last week’s decline would next target 2747.00 and 2738.00 then 2722.00. Sunday night’s opening bar pierced 2738.00 by 2 ticks. It was probed and retested, but not broken before price firmed through the night to attack 2752.00. A pullback recovered to 2755.00 before diving into Europe’s opens. That held 2745.00 and recovered to test 2756.00 back at Friday’s post-close lows. That only seems to have angered and awoken last week’s decline, as the past 3 hours have trended straight back down to — and now 3 points through — 2738.00.

If, then…
Isolating the probe under Friday’s lows to the overnight would have formed a setup capable of new highs before allowing the next downleg. The past several hours plunging 20 points makes that unlikely. Still probing fresh lows at Monday’s open, and not recovering 2747.00 and 2738.00 would next target 2722.00. Testing it at the open could find no sellers, and produce a corrective bounce. But any bounce at this stage is only corrective, or at least should be required to prove otherwise.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2743.50 would be likely to trigger the 2747.25 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…
Despite an interim rally to 2837.50, Wednesday’s late test of 2814.50 down to 2813.00 was probed back down to 2809.50 just before Thursday’s open. Its reaction recovered 2814.50 into the open, and eventually attacked 2837.50 into the afternoon’s bias environment. Its attack was poorly timed, and bonds probing new lows set the tone for another drop back down to Wednesday’s 2813.00 low. Although there was no bullish reason for the area’s revisit, the close bounced and attacked 2824.00.

Overnight action’s new info…
Post-close high-profile earnings (AMZN, AAPL, GOOGL) repeated the after-hours volatility that has become almost normal this week. But the initial Globex bounce up to 2831.00 was reversed back down to Thursday’s late 2812.50 low. Ranging at 2815-2821 gave way as Europe’s opens triggered a collapsed to 2797.00. Its reaction up to 2806.00 has been narrowing to form an Ascending Triangle.

If, then…
Of course, the bullish scenario is that this week’s selling has become more pessimistic than the news can justify. Which could be true, if this week’s selling were triggered by pessimism. But to the degree that it was “triggered,” excessive optimism better defines the origin’s sentiment. Pessimism has surely developed along the way down, and now there’s potential for having overly-discounted its sentiment ahead of this morning’s Employment Situation report. But optimism seems alive and well with the after-hours bounces among yesterday’s post-close earnings plunges. The most bullish scenario would recover enough pre-open to isolate the probe of fresh lows to the overnight — and also maintain and extend the recovery through the open. Another bullish scenario would quickly test the next lower objectives at 2805.00 and possibly 2793.50 and also quickly recover through the open. The weekend’s impending illiquidity can exaggerate the morning’s action in either direction, so first impressions may be lasting.

First Trade…
[Click here to view the Bias parameters] Preliminary levels are not considered on Employment Situation report days.

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 gap up above Tuesday afternoon’s ~2831.50 highs extended higher to attack 2840.00. That was 16 points above Tuesday’s close. Bullish? It was still essentially within Tuesday’s range, which was very wide and able to make bounces seem like strength. It was also a return of the ongoing 2-3 week pattern of rejecting early strength early — the setup that had told us last week the rally had become distributive. Its reaction down into the noon hour stopped 1 point short of filling the gap back to Tuesday’s ~2824.00 close. That optimism later proved bearish from a contrarian perspective. The initially favorable knee-jerk reaction to the afternoon’s FOMC policy statement was reversed down hard from 2835.00 to fresh lows at 2813.00. RSIs diverged positively on a retest of 2813.00, launching a late bounce above 2820.00 to trigger a rally with room up to 2830.00. It attacked 2832.00. the close reacted down to 2824-2825.

Overnight action’s new info…
Initially extending up to 2835.00 formed a Symmetrical Triangle that broke higher to 2837.25. The pattern’s breakouts are often false, and reversed more substantially in the opposite direction. As was this one, which retraced the breakout into Europe’s opens, and has since fallen to 2825.00. Which, regardless of the degree and duration of the drop, is back to unchanged from yesterday’s close.

If, then…
I was unavailable for more than annotating the live chart yesterday afternoon. But the market was accommodating enough to fulfill the eventual offsetting test of the morning’s bias-up target down to its 2814.50 bias-down target. The morning’s bias-up signal was never rejected to actually put that into play, although its support was likely to be influential if tested. And its support was influential in producing the late bounce. While that bounce put the market into proximity of gapping up Thursday above 2835.00 to reject the traction gained by yesterday afternoon’s sellers, it also expended valuable buying pressure. Gapping up any shallower — or not gapping up at all, still could probe lower lows down to 2805.00 or 2793.50.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2827.75 would be unlikely to trigger the 2824.00 bias-down signal at 10:15. Exiting the open under 2827.75 would be unlikely to trigger the 2830.00 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…
Tuesday started pessimistically, but didn’t get worse. It may have looked or felt that way since the range is so wide. Gapping down sharply 22 points to 2832.00 immediately probed another 3 points lower. A quick 10-point bounce reacted down 20 points as quickly to 2818.50. All during the first half-hour. The balance of the session ranged choppily sideways, narrowing through the day and closing around 2824.00.

Overnight action’s new info…
Wide, choppy gyrations that characterized intraday action has also defined last night’s ranging. More so, the choppiness expanded instead of contracting, and it has been flat-to-higher. Firming 6 points into the State of the Union speech ultimately surged 6 points afterward to 2835.50. Collapsing 10 points reversed up almost 12 points. And still, yesterday morning’s 2837.00-2839.50 highs have barely been attacked. The last dip to 2828.50 has reacted up to attack 2835.00, about 11 points above yesterday’s close.

If, then…
For all of yesterday’s persistent pessimism, and for all of the overnight choppiness, yesterday’s opening range still stands. Neither end has been touched since then. None of which prevents trending, but it limits the window for starting it. And anything which is limited is implicitly less likely. Having said that, yesterday’s wide opening range does allow reactions within it to be as satisfying as a usual trending leg. Yesterday morning’s highs could be probed into the “empty” space of its gap down (in the Market Tour, I show how to identify the resistance that’s in it). But while this afternoon’s FOMC policy statement is impending, a resolution will likely be inhibited.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2838.50 would likely also exceed the 2837.25 bias-up target at 10:15 to renew the bias-up signal, next targeting 2845.00. Exiting the open above 2831.75 would be likely at least to trigger the 2830.00 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…
Monday’s open immediately signaled the morning’s trend would be down, by opening back under the earlier low of an overnight session that had probed the prior session’s high. Bouncing into resistance at 2871.00 was reversed to test 2855.00. Coinciding with Friday morning’s highs offered support to launch a bounce into the afternoon that tested 2868.00. But it failed to trigger bias-up, and the balance of the session slid again. Testing 2852.00 before the close had time to react back up above the morning’s low.

Overnight action’s new info…
Yesterday’s drop resumed overnight. Flat-to-lower choppiness through the Globex open eventually collapsed sharply to 2831.00 before midnight. That area is also Thursday afternoon’s last relative low, which now serves as support. Already retracing up to what is this morning’s 2845.50 bias-down target — which acts as resistance from below — a narrowing consolidation developed into and out of Europe’s opens.

If, then…
Monday’s very late bounce was probing back above the morning’s low within 3 minutes of the cash session close. So, sellers didn’t gain traction for their efforts. The bounce didn’t recover a prior high, so buyers didn’t gain traction on the bounce. This context for last night’s drop allows it to be briefer before recovering. Briefer, within the other context of yesterday’s opening signal being likely to persist into this morning. Recovering further pre-open would still encounter resistance at 2848.00-2850.50 which must be recovered just to indicate that sellers still aren’t gaining traction for their efforts. Otherwise, the gap back to Thursday’s 2840.00-2841.00 close may be a last line of defense before this downleg becomes something more substantial.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2848.00 would be likely to trigger the 2850.75 bias-down signal at 10:15. Exiting the open under 2841.00 would be likely also not to recover the 2845.50 bias-down target by 10:15 which would renew the bias-down signal.