The First Trade… That might leave a mark.
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…
Firming at Monday”s open peaked upon touching Friday”s 2113.50 prior high. Its recovery was necessary to resume Friday morning”s rally, since buyers were fully rewarded and had failed to gain new traction. Trending back down through the afternoon”s bias environment stopped a little optimistically short of its potential to at least 2102.50. Last-hour selling took over by probing the lower-end of its potential down to 2098.50. No unfinished business below was left outstanding.
Overnight action”s new info…
Monday”s late dive extended to test 2096.00. Relatively narrow ranging tired of the status quo, and eventually firmed up to 2101.00. Apparently, that only angered the market into snapping back down sharply to fresh lows. A seemingly relentless slide has extended to attack 2079.00 — along the way, ignoring three consecutive 3-minute RSI positive divergences (four 1-minute divergences). The last divergence was finally recognized by printing at least 2085.00. And then it reacted back down to 2082.00.
If, then…
Two points: First, while yesterday”s pullback was sufficient to extend the rally targeting new highs lower lows at 2091.25-2092.50 would have confirmed. And still could. Recovering at least that much by the open, and then improving through the open, could probe new highs today. Today, not a typo… Second, the alternative is diametrically opposite, and then some. Three consecutive ignored positive divergences (bouncing only shallowly before extending lower) happens when market facilitators panic calmly. At this stage, either they”ve absorbed very large selling pressures, or at least an equivalent amount is yet to come. The former would form a bottom, while the latter could last all day — conservatively targeting the 2062.00 area. More so, the latter could take new highs off the table… A third bonus point: Among other scapegoats, the drop is associated with Greece”s debt payment scheduled today. Making it wouldn”t end their crisis, but it would likely end this leg. Meanwhile, VZ just announced it is buying AOL at a 20% premium to yesterday”s close, so scapegoats for a rally aren”t all dead.
First Trade…
Exiting the open at 9:45 above 2093.50 would be likely to recover this morning”s 2092.50 bias-down target through 10:15, and not renew the bias-down signal. Exiting the open under 2084.50 could extend next to the 2077.00 area.