The First Trade.
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…
Stocks came back from the New Year”s Day break by actually coming back from the New Year”s Eve breakdown. There wasn”t going to be anything easy about that. Gapping up 8 points from Wednesday”s ~2053.00 close and immediately extending higher another 5 points to 2066.00 still couldn”t reverse Wednesday”s last half-hour plunge. So, Friday reversed back down and extended the decline to its 2040.00 target, also fulfilling the afternoon”s 2039.00 bias-down target. Bouncing through the position-squaring window retraced 61.8% of the post-open high at 2055.50 before dropping 10 points into the close.
Overnight action”s new info…
Friday”s last-minute 10-point plunge immediately began extending down another 10 points. Room for noise under the decline”s 2040.00 target down to 2036.00 was attacked to within 2 ticks. The portion that probed under Friday”s low was a singular spike down, so it is not a “new Globex trend extreme.” Bouncing from there has twice tested 2048.00, reacting down both times to at least 2040.75 — this morning”s bias-up signal and target, respectively.
If, then…
All caught up? Seriously, the “previously on Downton Abbey” is shorter. But each of the elements listed above is pertinent to where the market is, how it got here, and what comes next. The decline”s 2040.00 target is met. Room for noise under it contained an overnight probe, without creating any requirement to be retested. Elsewhere, Crude Oil is fulfilling its 51.75 target, currencies are greeting the new week very extended with potential to invert. And a full week lies ahead. If that”s not enough to have depleted recent sponsorship and to attract counter-trend sponsorship for an aggressive rally, then this decline should be much lower soon.
First Trade…
Exiting the open at 9:45 back above 2052.50 would be unlikely to trigger the 2048.00 bias-down signal 30 minutes later at 10:15. Exiting the open above 2055.00 would be likely also to trigger the 2056.75 bias-up signal. Exiting the open under 2042.00 would be likely also to trigger the 2048.00 bias-down signal.