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 gap up extended higher too late to confirm the follow-through was strong-handed. The noon hour’s rally earned a similar, albeit inconsequential, objective. How inconsequential? When I was stepping away from the screens early as the position-squaring window was closing, the 7-point gap up to 2847.00 had extended 21 points. That touched the next higher objective above 2848.00 at 2868.00. Usual and reliable Friday Factors helped — from the persistent morning’s bias, to squeezing the bias environment exit on a trending day. After I left, the rally extended to its room for noise at 2872.25.

Overnight action’s new info…
Extending higher after the cash session close touched 2876.00. And extending that again soon after Sunday night’s open pierced 2874.25. All of which was retraced back down to the rally’s 2872.25 room for noise that was tested into Friday’s close. The natural support back down at unchanged was tested through midnight, but never launched a recovery before giving way through Europe’s opens. Fresh overnight lows at 2864.00 have retraced back down to Friday’s final-hour entry.

If, then…
The new week isn’t being greeted by the familiar optimism. Which could be doubly problematic, since that sentiment was dominant into the weekend. And also out of the weekend, initially. So, triply problematic? How about quadruply problematic: Recall that Friday’s open ignored the two-week pattern of rejecting early strength early. To the degree that was due to the Friday Factors’ impending illiquidity, then how dramatically will the new week compensate for it? Exiting this morning’s opening 15 minutes of volatility at 9:45 under the earlier overnight low around 2873.50 would reject the overnight probe above Friday’s high. All that having been said, the open may very well absorb or retrace its gap down. Even if not, a new trend extreme close on a Friday requires there to be at least another, eventually. And now the initial overnight rally had complexity to qualify as a “new Globex trend extreme” requiring intraday retest, eventually. Leaving them outstanding by an immediate downdraft Monday would be considered only temporary, no matter the reversal’s degree or duration.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2864.50 would be likely also to trigger the 2866.25 bias-down signal at 10:15. Exiting the open above 2870.50 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 night’s rally didn’t only gap up into Thursday’s open. It gapped up into an increasingly bearish pattern of early strength being rejected early. The pattern differed Thursday only in its early surge having come pre-open, a news headline’s knee-jerk reaction up to 2853.75. Regardless of the accelerated timing, it was already snapping back down into the open, which immediately neutralized the “unfinished business above” at Wednesday’s 2848.00 open. The first half-hour’s collapse retested overnight lows down to 2933.75 and bounced again to attack 2848.00. Apparently, that strength was early enough to be rejected down to new lows at 2830.75. So early, that even that drop bounced 9-10 points to close at 2840.00-2841.00, almost flat on the day. But still too late for the late bounce to prevent sellers from gaining traction for their efforts.

Overnight action’s new info…
Thursday’s late bounce had extended through the close, and through the Globex open up to 2847.00 before midnight. Narrow ranging through Europe’s opens finally broke higher to recently test 2852.00. A pullback is now testing what is this morning’s 2849.00 bias-up target as support.

If, then…
Patterns don’t go on forever and repeat endlessly. It’s not uncommon for a series to contain 5, 6, 7 observations of the same behavior. And the 2-week long rally since the last 3-day weekend already contains 4 obvious early rejections of early strength. But a couple of others could qualify. So, I know what your thinking — especially with another gap up indicated this morning… Did this pattern of rejecting early strength early already run its course? Will this gap up be maintained through the open to reject yesterday afternoon’s sellers having gained traction? That could combine quite bullishly with a quasi “session-long rally” setup and Friday morning biases tending to persist through the noon hour. Or, is there at least one more early rejection of early strength left in the chamber? Whether through the open, or after a post-open surge, another ambush by rejection awaits. Well, there’s one way to find out… Okay, maybe two ways. Either extend higher through the open and above any resistance encountered during those first 15 minutes of volatility, or else exit the open trending down and preferably back under 2843.00. Punk (With apologies to Dirty Harry).

PROGRAMMING NOTE: Friday’s Market Wrap will be held at least one hour early.
REMINDER: There is NO Saturday Review this weekend AND next.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above at least 2845.50 would be likely to trigger the 2843.75 bias-up signal at 10:15. Exiting the open above 2851.00 would be likely also to exceed the 2849.00 bias-up target through 10:15 to renew the bias-up signal next targeting fresh highs.

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 to 2348.00 was briefly consolidated before surging to attack 2855.00. RSIs diverged negatively on its retest, presaging a 30-point drop to 2825.50. The afternoon bounce probed a couple of points back above Tuesday afternoon’s highs up to 2845.25. It held as resistance through the close to prevent the afternoon’s buyers from regaining traction for their effort. However, Tuesday afternoon’s last relative lows at 2837.00 were recovered to prevent the morning’s sellers from gaining traction for their effort. Meanwhile, “unfinished business below” was created by the afternoon’s “bias-down rally” which requires retracing its 2835.50 bias-down signal that was recovered prematurely. Also left outstanding was Wednesday’s 2848.00 opening gap which requires an intraday retest.

Overnight action’s new info…
Initially dipping through the Globex open pierced the 2835.50 attraction below by 1 tick before bouncing 8 points to test what is this morning’s 2843.00 bias-up signal. Its retracement down into Europe’s opens came within 1 point of the earlier low. Reacting back up has extended to fresh highs probing yesterday’s 2848.00 open by 2 points — also probing what is this morning’s 2849.25 bias-up target.

If, then…
Last night’s initial dip neutralized the required retest of 2835.50. Its recovery can’t neutralize the 2848.00 attraction until the open. And its probe is already testing the objective’s room for noise, with ECB, Draghi, and four pre-open econ reports yet to have their impacts. Almost any higher would become likely to probe yesterday’s 2855.00 high, and then 2872.25. Meanwhile, a new observation suggests otherwise. Yesterday’s drop rivaled last Tuesday’s 39-point high-to-low intraday drop. Yesterday’s low retraced 61.8% of the distance back down to the 2809.50 origin of last Tuesday’s drop. Several other Fibonacci relationships between the two drops and their interim price action all suggest the one-week, 85-point move reflects the same sponsorship. This implies that intraday behaviors will repeat. Not extending higher intraday is becoming likelier, as is an intraday rejection of morning strength. So, maintaining the rally depends on not rejecting early strength early.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2850.50 would be likely also to exceed the 2849.25 bias-up target through 10:15 to renew the bias-up signal, next targeting 2855.00. Exiting the open above 2845.50 would be likely at least to trigger the 2843.00 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 impressive surge might have quickly peaked after extending into Tuesday morning. But a 13-point pre-open slide reinserted pessimism and refueled buyers. And probing fresh highs overnight created a “new Globex trend extreme” requiring intraday retest. Threatening to open under the earlier overnight low could have been bearish, but absorbing it put into play a near-term retest of the overnight high. Which is what the morning did, probing it by 2-1/2 points. The balance of the session ranged choppily sideways, above Monday’s highs. “Unfinished business above” was left outstanding at the morning high’s the overbought RSIs.

Overnight action’s new info…
Yesterday afternoon’s choppy sideways ranging shrank in size as it hovered at or above the afternoon’s 2837.00 lows. Surging well before Europe’s opens attacked the 2843.50 upper-end of yesterday afternoon’s range, then extended to new highs attacking 2847.00. Overbought RSIs at the intraday high were neutralized, and no complexity formed the requirement for a retest. Nevertheless, a reaction down to 2843.00 is now attacking 2848.00.

If, then…
If no interim downdraft appears before the open, then the overnight action could be the temporary relief rally that was yesterday’s original template. Three other helpful elements to topping are: avoid gapping up above yesterday’s 2844.50 high, probe the overnight high by 6-8 ticks, all by mid-afternoon. But that’s just enough to optimize the vulnerability to reversing down without leaving unfinished business above. Forming these topping elements without tracking the reversal template could resolve as bullishly as the resolution could have been bearish. Producing only a post-open pullback could still extend down, but probably not durably.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2840.50 would be unlikely to trigger the 2843.00 bias-up signal at 10:15. Exiting the open above 2845.50 would be likely to trigger bias-up.

Phonetic dictation…
.

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…
A pullback triggered by the government shutdown was likely. The pullback was likely to be shallow, but unlikely to recover quickly. Sort of like the shutdown itself. Sunday night’s 8-point gap down to 2803.75 affirmed the expectation, as did the reaction down from a pre-open surge. I’m not sure whether the absence of rhetoric should have meant a political deal was close, but the market was clearly relieved — a deal was reached Monday morning while the market rallied to new highs. The morning’s bias-up target was probed up to 2822.50 during the open. The afternoon’s bias-up target was probed up to 2828.00 during the noon hour. The last half-hour surged most steeply to 2835.00 and 2836.50 into and out of the cash session close.

Overnight action’s new info…
Initially retesting the cash session close back down to 2834.00 was held, and the range had begun trending higher by midnight. A blip-up to 2842.00 into Europe’s opens wasn’t extended, but its move was complex to form a “new Globex trend extreme” requiring eventual intraday retest. A relatively narrow consolidation started slipping a couple of points, and now has collapsed into negative territory testing 2829.00. The first reaction up is already testing the earlier 2834.00 overnight low as resistance.

If, then…
To the degree that Friday’s very late probe higher can be considered a breakout, then Monday’s higher close could be considered its confirmation — but Fri/Mon breakout confirmations aren’t reliable. If the chart were inverted to form a plunging correction, then I would expect the friction of ground already covered previously to produce a reversal soon. Fresh territory like most of Monday’s range still has the friction of calculable resistance, but it’s more vulnerable to bigger capitulation. Now that the overnight probe has left a path of crumbs to find its way back up, then dipped back into negative territory, retesting the previously covered ground above can offer a more predictable friction. Probing the highs — perhaps up to 2848.00 — after gapping down would form the basis for a bearish Pivot Reversal if reversed into the close. Rallying this morning will be difficult if the earlier overnight low isn’t already recovered through the open, since yesterday’s high has been probed overnight. But a a deeper pullback this morning has a lot of room below to expend selling pressure before breaking any relevant levels that would damage the uptrend. The burden of proof is still on sellers.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2833.000 would be unlikely to trigger the 2831.75 bias-down signal at 10:15. Exiting the open under 2830.00 would be likely to trigger bias-down.