The First Trade… Gapping up through headwinds.

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…
Monday”s sell-off from 2101.25  bled into Tuesday”s session, thoroughly testing the maximum 2076.00 pullback limit. Two timing windows failed to break lower, and the second window was exited in rally mode. The noon hour”s 2092.00 high was consolidated through the afternoon, perhaps inhibited ahead of post-open earnings. Buyers didn”t gain traction for their efforts.

Overnight action”s new info…
Tuesday afternoon”s consolidation bled into the overnight, trading flat-to-lower within Tuesday afternoon”s range. One hour after Europe”s opens a surge probed above Tuesday”s range to 2095.00. That has since extended to 2097.00..

If, then…
The rally was likely to resume today, and the rally”s resumption was likely to begin by gapping up. But gapping up does not ensure the rally is resuming. Already trading 5 points above yesterday”s high is testing 2097.00, important resistance that was Monday morning”s support and eventual sell signal. Post-open testing of relevant resistance requires exceeding it through that timing window”s exit, or else a reversal down would become likely — even if only as a temporary correction. It is possible to expend too much buying pressure to be sustainable, which would be “ineffectual optimism.” There is a benefit of the doubt for extending higher, but we”ll still be prepared for signs that new sponsorship isn”t being attracted. Bank of America (BAC) just announced earnings and the ECB just announced policy, neither having an effect on S&Ps. Mario Draghi”s press conference will begin soon, a centrist Fed speaker is scheduled pre-open, and a hawk is scheduled post-open. Until the bias timing window triggers at 10:15, we”ll still give dips a benefit of the doubt to be recovered.

First Trade…
Exiting the open at 9:45 above 2097.00 would be likely also to trigger the 2094.50 bias-up signal at 10:15. Exiting the open above 2103.25 would be likely also to exceed the 2100.50 bias-up target at 10:15 to renew the bias-up signal. Exiting the open under 2088.00 would be unlikely to trigger bias-up.