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 complete retracement of Thursday’s rally was the resumption of distribution that I began identifying on Monday. Its chart is copied below. Thursday afternoon did not confirm its breakout, because the session’s rise to 2866.00 from a pre-open dip to 2813.75 was only a function of having dumped ballast Monday, Tuesday, and Wednesday. Gapping down Friday could have been limited to backing-and-filling ahead of another rally effort into the close or Monday. But its 2830.75 pullback objective resolved down as the morning’s bias environment lapsed. The noon hour’s fresh lows at 2806.50 reacted up 22 points, only for the final hour to retrace it all (yet another failed intraday rally). No “unfinished business” remains above. And Friday’s close was under the prior multi-session consolidation (circled red below), starting to signal the trend reversing down.

Overnight action’s new info…
The weekend’s so-called Russiagate report is favorable to Trump, so an overnight rally was likely. It amounted to gapping up back to 2813.00, and immediately extending 5-1/2 points. That was retraced as quickly almost entirely, and then the decline resumed by collapsing to 2792.00. Ranging sideways up to 2801.00 probed lower through Europe’s opens to attack 2790.00. But only momentarily, as a snap up has extended back above Friday’s lows to test 2810.00.

If, then… (notes to accompany the Tour recording)
Thursday’s rally could have proved itself by a second consecutive higher close above the week’s range, which it did not. Similarly, now breaking under the week’s range must prove itself by closing lower again on Monday. Of course, it always seems darkest before the dawn. And, more on point, bull markets have a way of stepping right up to the brink, and then reversing. The alternative to falling into this precipice — the most glaring and pronounced precipice since long before the ongoing Christmas rally — avoiding this precipice would suggest resuming the rally to much higher highs. The “dawn” could be an Isolation setup that leaves behind the overnight probe, holding above Friday’s 2805.00-2806.50 lows. The setup is forming now. Meanwhile, Friday’s lows are also resistance, and rejecting an Isolation setup can be as bearish as it would have been bullish.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2812.00 would be unlikely to trigger the 2815.75 bias-up signal at 10:15. Exiting the open above 2806.50 would be unlikely to trigger the 2803.50 bias-down signal. Exiting the open under 2800.50 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…
Thursday literally snatched victory from the jaws of defeat. The pre-open fresh low attacked critical 2813.00 support, but recovered back above Wednesday’s 2817.25 low to form an Isolation setup. Its reward would be to retrace the week’s ~2860.00 prior high. The setup gained confidence halfway through the opening 15 minutes of volatility, and from the entire open’s steep slope, if not also from extending higher through the first half-hour. A noon hour pullback resolved up to 2866.00 — already fulfilling the Isolation setup’s objective.

Overnight action’s new info…
Exiting Thursday afternoon’s bias environment ranged sideways through the close. The range persisted through the Globex open, dipping to 2856.00 by midnight. That was also a test of this morning’s 2857.25 bias-down signal, and its test produced a bounce back up to unchanged at 2862.50. A 30-minute drop fell down to 2847.25, which is still being tested as price hovers around this morning’s 2849.25 bias-down target. Interestingly, Zerohedge is reporting a favorable Trump China Trade comment, and it’s having only little near-term impact on price.

If, then… (notes to accompany the Tour recording)
Thursday afternoon’s no-bias trending has now been retrace to both its 2854.50 bias-up signal and 2852.00 1:20 print, which remained attractions below. The afternoon’s buyers had gained no traction for their efforts, so extending higher today all but requires gapping up, which isn’t currently indicated. Rallying anyway would be likely to fail, whether only from filling the gap back to yesterday’s close or probing yesterday’s highs. Meanwhile, the week’s earlier 3-day series of failed intraday rallies hasn’t indicated its demise, but it’s not yet clear whether the overnight dip is the start of its return, or if it’s just natural backing-and-filling after a multi-session outside day.

First Trade…
[Click here to view the Bias parameters] Exiting the open above 2861.00 at 10:15 would be unlikely to trigger the 2857.25 bias-down signal at 10:15. Exiting the open at 9:45 under 2854.50 would be likely to trigger bias-down. Exiting the open under 2846.00 would be likely to exceed the 2849.25 bias-down target at 10:15 to 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…
Despite Wednesday’s unusual probe under the prior session’s 2829.00 low — unusual, for developing ahead of the afternoon FOMC events — the session was an awesome display of the If-Then analysis’ utility. The FOMC day context told us that extending so low as to attack 2817.00 from Tuesday’s 2841.00 close was weak-handed all the way. And that told us the overly-discounted FOMC news was almost impossible not to react favorably. In fact, the policy statement was greeted at 2825.25, already long from 2822.00 after a failed long-entry at 2825.25, and its reaction surged to 2842.50 and 2849.00. Then the no-bias environment context told us that everything above the 2828.75 bias-up signal was “no-bias trending” requiring retracement. In fact, it was retraced entirely before the position-squaring window opened, and retested into the close. Which also fulfilled the bigger picture context of the recent distributive pattern I began highlighting Monday, producing its third consecutive failed intraday rally.

Overnight action’s new info…
No-bias trending can also be attracted to retracing its 1:20 print. That was essentially 2823.25, and it was met before the Globex open. Its test reacted up from 2822.75 to pierce this morning’s 2835.50 bias-up signal, and then retraced entirely through Europe’s opens to eventually attack 2820.00. Now a bounce to yesterday’s 2827.00 futures close has collapsed to fresh lows testing 2819.00.

If, then… (notes to accompany the Tour recording)
The ongoing pattern of retracing intraday rallies just retraced its third. It was both the biggest retracement AND from the lowest levels. Now an overnight rally — not an arbitrary bounce, but a bounce up to this morning’s bias-up signal — has been retraced already. Yesterday’s intraday rally makes it seem that buyers are strong and willing. But that was a function of the deeply oversold condition that greeted the rally’s FOMC catalyst. More important is the intraday rally’s complete reversal, and now immediately following it comes last night’s reversal. All of which makes it seem that strong-handed sellers are losing patience waiting for rallies to sell. Not recovering yesterday’s highs today, let alone trending down to fresh lows, could keep the market on defense into and out of the weekend.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2818.75 would be likely to trigger the 2823.50 bias-down signal at 10:15. Exiting the open above 2825.25 would be unlikely to trigger bias-down. Exiting the open under 2830.75 would be unlikely to trigger the 2835.50 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…
Rallying sharply Monday night had formed a “new Globex trend extreme” at 2853.00. It also allowed probing fresh highs without relying on intraday sponsorship, which had failed to maintain Monday morning’s highs. Gapping up to 2849.75 ranged choppily sideways until the bias environment came within view of lapsing, then surged 15 points to attack 2859.00 as noon began. Intraday sponsorship did it again, retracing the rally down to 2853.00, then collapsing to 2841.50 on a China trade headline. A bounce to 2852.00 was reversed to fresh session lows through the 3:10-3:20 proxy window to signal a more substantial drop forming. Right into the position-squaring window at 2829.00, bouncing back up to 2840.00 through the close.

Overnight action’s new info…
Volatility is already alive, including a fresh low, and a wide reversal around unchanged. Tuesday’s late bounce had begun retracing back down immediately at the Globex open. The late low was retested by 1 point to 2828.00, essentially this morning’s bias-down signal. A bounce retraced 61.8% up to 2835.50 by midnight, where a consolidation resolved up and extended the bounce through Europe’s opens to 2842.50. That’s essentially this morning’s bias-up signal, and a probe into positive territory, and their resistance has reacted down to 2834.00, and looking at least a little lower.

If, then… (notes to accompany the Tour recording)
No “unfinished business” above, and two consecutive sessions of distribution ahead of this afternoon’s FOMC events, doesn’t prevent rallying. Whether ahead of the event in belief that yesterday’s drop was defensive enough, or in reaction to the event because another bullet is dodged. Regardless, the Fed — and all Central Banks — are in a controversial phase of trying to let rhetoric do their work, all creating a very opportunistic trading environment.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2830.75 would be unlikely to trigger the 2828.50 bias-down signal at 10:15. Exiting the open under 2838.50 would be unlikely to trigger the 2842.25 bias-up signal.