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The First Trade… Rally set-up, or being set-up? – If, Then… Market Timing

The First Trade… Rally set-up, or being set-up?

By Rod David | August 25, 2015 - 6:45 am

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

CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
The biggest one-day negative print Monday also produced one of the biggest intraday rallies. And one of the biggest intraday drops from there. Price trended down into the close — twice, as the afternoon”s 76-point slide from 1950.00 down to 1873.50 hiccuped to 1922.00, and then plunged again to 1867.50.

Overnight action”s new info…
1920.00 is Tuesday morning”s bias-up target, so it”s not coincidental the overnight rally initially peaked there and then double-topped there ahead of China”s open. Dropping down to 1885.50 was recovered as the overnight rally resumed, eventually probing above 1936.00. Consolidating there blipped-up on news of a China rate cut and devaluation. A “blip-up” in this environment means double-digits, attacking yesterday”s highs up to 1948.50. A 12-point reaction down has now largely recovered.

If, then…
Is a rally setting up for today, or is the overnight rally being set-up? Yesterday afternoon”s 1947.00 high printed as the bias environment got underway. So, after trending down into the close, gapping up above 1947.00 could form a “session-long rally” setup. The missing element would be to maintain the gap up through the open. Otherwise, the setup can become as bearish as it would have been bullish. The bearish consequence would be attracted down to fill the gaps at yesterday”s 1886.00 and 1878.00 cash and futures closes. There isn”t much attraction above except for the gaps back to Friday”s 1968.00 and 1970.00 closes.

First Trade…
Exiting the open at 9:45 under 1910.00 would be unlikely to exceed the 1920.00 bias-up target through 10:15, not renewing the bias-up signal. Exiting the open above 1938.00 would likely exceed 1920.00 at 10:15 to renew the bias-up signal. Exiting the open under 1890.50 would be unlikely to trigger the 1910.00 bias-up signal.

Posted in S&P, The First Trade