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The First Trade. – If, Then… Market Timing

The First Trade.

By Rod David | March 13, 2015 - 8:38 am

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

Enter the Chartroom here (pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Gapping up to and through Wednesday afternoon”s 2041.00 high triggered a “session-long rally” setup by rejecting Wednesday”s sell-off to 2030.50. The open”s surge to 2051.50 was probed before noon. The last hour”s surge extended again to test 2059.00. And buyers gained traction for their efforts, exiting the bias environment above the noon hour”s high, and entering the final hour even higher.

Overnight action”s new info…
After a dip attacked 2055.00, fresh highs were probed up to 2061.25. Choppy ranging tested it again. But despite recovering from another dip that attacked 2055.00, a very steep 90-minute drop is now testing yesterday morning”s 2051.00 high as support.

If, then…
The successful “session-long rally” setup tends to trend higher through the next morning. This would appear to be doing the opposite, but it looks worse than it is, so far. This pre-open drop hasn”t yet done any damage that can”t be rejected and recovered by the open. Even though the market is down 6-7 points from yesterday”s cash session close, it”s still supported by “lower prior highs” from intraday yesterday. In other words, its trend hasn”t reversed down. The rest is just an optical illusion — the drop looks bigger on the chart because being very recent it is very steep, and because it fresh highs had been probed overnight. And 2051.50 which is being tested now is relevant support, being this morning”s bias-down signal. Regardless of the opening print, potential to probe fresh highs this morning remains alive unless rejected by the opening 15 minutes of volatility.

First Trade…
Exiting the open at 9:45 under 2049.25 would be likely also to trigger the 2051.50 bias-down signal 30 minutes later at 10:15. Exiting the open above 2055.75 would be unlikely to trigger bias-down. The 2060.00 bias-up signal won”t be any likelier to trigger until also exiting the open above 2063.00.

Posted in S&P, The First Trade