I’m not one who puts a whole lot of emphasis on morning gap plays just for the sake of morning gap plays. I’m looking for 3+ Convergence and if I can find that in conjunction with an exhaustion gap then all the better. This morning was just such an occurence.

After being up decisively over the past 2 days, the market was becoming overdue for a 60-minute correction to some degree. That being said, the ER2 was poised for a possible 15-minute negative price divergence (PD-) going into this morning so I was a little bit cautious.

After this morning’s employment numbers, the ER2 ran higher a full 5 points in the pre-market without much of any kind of meaningful pullback in the interim. This is just the kind of extended move after an already extended market that is ripe for a likely morning gap fill.

The first thing I noticed right at the open was the 610-tick chart that was starting to roll over both in price & in momentum (as measured by the TRIX). The next thing I noticed was the Market Delta chart (not shown) which was clearly showing a great many trades taking place at the bid versus the offer, further indicating downward pressure.

Once the low of the 610-tick reversal bar was broken, I didn’t see any support until the 795.50 area shown. So I went short at 797.10 with a limit buy to cover order open at 795.80, 3 ticks above my target. Sometimes here I would put the cover order at 795.60 or even 795.50, but one of my biggest priorities of every day is to make the first trade a winner as I’ve found that doing so really puts me in a better mindset when going forward to hit my net goal for the trading day. So any trades I make before 10:00 I tend to play much more conservatively for this very reason.

Well a few seconds later I was out with a 1.3 point profit and within another 5 minutes I had hit my target for the day. Gotta love days like today when you only have to work less than 10-minutes!