The First Trade… Central banks on holiday?
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Thursday’s gap up to 2178.00-2179.00 was more successful than Wednesday’s gap up to 2178.00-2179.00. Both probed lower soon after the open, but Thursday recovered above the overnight highs. And then to fresh highs. And finally to new highs. Wednesday had declined through much of the day without gaining traction, so it’s interesting to note that it was followed by a rally. Thursday’s rally, meanwhile, didn’t gain traction, and created no higher attraction.
Overnight action’s new info…
New highs, again, and still no overnight enthusiasm about it. Not even rejection, which at least would anticipate volatility. Thursday’s late 5-point reaction down from 2185.50 didn’t extend. But a 3-point range expanded to 4 points at Europe’s opens, and is still trading flat with yesterday’s close. That’s just complacency, which is usually ended by exploding in one direction, or the other.
If, then…
Yesterday’s late, momentary surge was well-positioned to extend higher on a short-squeeze. Quickly absorbing the inflection point instead and reacting down suggests very little short interest is available up here to be squeezed, at this stage of the rally. Which has been an ongoing characteristic during the past several weeks, whether immediate or delayed one day. Pessimistic shorts would be bullish from a contrarian perspective. So far, their absence.is more of a “sell strength” signal than an outright sell. This being a Friday, reversing down from another fresh high or just dropping would likely extend through the noon hour. By the same token, this being a Friday, another fresh high that does NOT quickly reverse down could drift higher into the weekend.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2187.00 would be likely to trigger the 2185.50 bias-up signal at 10:15. Exiting the open under 2181.00 would be unlikely to trigger bias-up,
“This being a Friday, reversing down from another fresh high or just dropping would likely extend through the noon hour. By the same token, this being a Friday, another fresh high that does NOT quickly reverse down could drift higher into the weekend.”
Isn’t there also a ‘Friday truism’ that says that a trend cannot end on a Friday? So, if today there was a strong reaction to a probe of new highs (or a collapse without even attempting a probe higher), should we expect that higher highs would still be seen next week?