The First Trade… Crappy New Year!

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK(s)
o New! Omnistream
o Anymeeting backup
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Friday’s gap down had extended to 2037.00 before bouncing. The bounce touched Thursday’s late lows around 2055.00 before returning to the morning’s lows. The final several minutes plunged to fresh lows attacking 2030.00.

Overnight action’s new info…
Sunday night’s open gapped up and extended higher to 2043.50. That barely attacked Friday’s late-afternoon highs. China began crashing, and even that relatively shallow bounce disappeared. Various countries aligning with either Iran or Saudi Arabia through embassy closings probably hasn’t helped. The balance of the night has been trended down relentlessly, recently touching 1995.00 and then bouncing to 2001.50. That’s basically a 40-point drop.

If, then…
We discussed air pockets Friday morning. The first one under 2030.00 became obvious during last year’s final minutes. The second air pocket under 2029.00 became obvious when China began crashing. The extension from there has leap-frogged several other “lower prior highs” to test one of the last “lower prior highs” remaining. And all of this is retracing in 2-3 days back to two-week old lows. Exiting the weekend with extreme sentiment is often a sentiment extreme. This was the case last weekend, after the morning followed-through shallowly. Exiting this morning’s open already bouncing from its 2-week old prior lows would suggest this leg isn’t extending, either. Otherwise, while the relentlessness might subside, the direction doesn’t have to reverse.

First Trade…
Exiting the open at 9:45 above 2008.00-2010.00 would suggest the overnight decline’s momentum had been absorbed. There is otherwise potential to 1991.00 before putting into play essentially a new leg, perhaps a crash leg greater than August’s.