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The First Trade… False start. – If, Then… Market Timing

The First Trade… False start.

By Rod David | August 18, 2016 - 7:16 am

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…
Higher and higher highs into and out of Wednesday’s FOMC Minutes were accompanied by overbought RSIs, requiring interim reactions down to recover. Which they did. RSIs didn’t get overbought at the last high’s 2179.75 peak, but that didn’t stop its retest from extending to 2181.00 into the close. Oversold RSIs were left outstanding at Wednesday’s 2165.50 low. Ironically, that low had probed the rally’s last relative low, so its recovery triggered a passively bullish WedEX

Overnight action’s new info…
Wednesday’s closing strength extended momentarily to touch 2182.00, and then began a dip back down to 2178.75. Recovering only probed fresh highs by 2-3 ticks before reversing back down to 2178.75, which is still being tested now.

If, then…
Invalidating the bullish WedEX would require gapping down Thursday under Wednesday afternoon’s 2169.25 low, or lower (which would also form a “session-long decline” setup). That’s not currently indicated, but neither yesterday’s recovery extending. Deteriorating RSIs into Wednesday’s last high opened the door to an overnight pullback. Avoiding that doesn’t shut the door to a pullback intraday Thursday. Having failed to gain traction Wednesday afternoon, the rally is unlikely to extend this morning anyway — not without maintaining a gap up.

First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2178.00 would be unlikely to trigger the 2182.50 bias-up signal at 10:15. Exiting the open above 2183.50 would be likely to trigger bias-up.

Posted in members-only, S&P, The First Trade