The First Trade… Range-bound and down.
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…
Ugh. Completely recovering from Tuesday night”s probe of fresh lows was predicted after the close. The 26-point drop to 2033.50 was several magnitude greater than the drop to 2054.50 I had anticipated, but still recovered. Perhaps it was the recovery”s size that inhibited it from turning positive at Wednesday”s open, let alone from trending back above Tuesday”s high. Wednesday”s open delivered another shock to the system by dropping 19 points. It ended quickly and was largely retraced, but the balance of the session ranged choppily sideways between 2045.00-2054.50, even by a last-minute surge to its upper-end.
Overnight action”s new info…
Wednesday”s last-minute surge to 2054.50 initially firmed a couple of points more. But that was reversed to begin trending back down to test the 2045.00 lower-end to Wednesday”s mid-day range. Current action is firming after having been ranging narrowly around 2045.00.
If, then…
Trending through the open beyond yesterday”s 2045.00-2054.50 range may be the only path out of its consolidation this morning. Those happen also to be this morning”s bias signals. The overnight dip can reflect caution, i.e. pessimism, which is potentially bullish from a contrarian perspective. That pessimism is ineffectual only so long as it holds the range”s lower-end, or recovers from probing under it to avoid triggering bias-down at 10:15. But the rally potential this morning probably requires triggering bias-up. Yellen speaks in a few minutes, after 24 hours of several other Fed speakers signaling their favoring a rate hike. More so than her actual comments, it is the eventual reaction to her comments — whether only trending up or down, or reversing from a blip-up or blip-down — can dictate whether the market has yet discounted or dismissed a rate hike.
First Trade…
Exiting the open at 9:45 above 2050.50 would be unlikely to trigger the 2045.00 bias-down signal at 10:15. Exiting the open under 2042.00 would be likely to trigger bias-down. Exiting the open above 2057.50 would be likely also to trigger bias-up.