Post-open Review

Did the right price and time finally coincide?

Any bullish scenario for this morning was required to quickly dispose of selling pressure. This morning’s open couldn’t have disposed of sellers faster.

The overnight low pierced the 2333.00 bias-down target by 3 ticks. Several points had been recovered already pre-open. The open dipped momentarily to 2334.00 and then extended the recovery. The opening 15 minutes of volatility lapsed at the 2338.50 bias-down signal. Extending higher during the next 15 minutes attacked the 2345.50 bias-up signal to within 3 ticks.

Rallying out of the open was the only other bullish scenario described for today. So, if not probing the overnight low and rejecting it, then the next likely path up was to avoid triggering bias-down altogether. More so, the three-day holiday weekend’s illiquidity is getting exponentially closer. Entering the morning’s bias environment in positive territory suggests strongly that sellers are marginalized.

One caveat is the overnight lows. They don’t require a retest. So, any setup that targets fresh lows would have potential to probe substantially lower. Back under 2340.50 would at least target 2337.00, if only 2337.00. But the burden of proof is on sellers.

SPECIAL PROGRAMMING NOTE: I WILL BE UNAVAILABLE 10:30-2:30 ET (after the market’s first hour, until the afternoon bias environment begins lapsing). The chaRTroom will remain open throughout, and audio will not return…

The open gapped down 3-4 points to 2347.00. The bias timing window proceeded to range choppily between 2344.00-2348.00. The ranging persisted through 10:15. Each of the first five 15-minute checkpoints have overlapped the opening print. Dry cleaners morning?

The 2344.25 bias-down signal happened to hold as support and avoid being triggered. And it withstood its grace period, putting into play an offsetting test of the 2353.50 bias-up signal. Already probing above the pre-10:15 high to 2349.50 makes that even likelier.

But signals are mixed. That surge didn’t last more than 3 minutes before reacting back down into the bias timing window’s range. Buyers aren’t attracting new sponsorship, which wasn’t even likely anyway without the open already rallying.

Breaking lower would likely hold yesterday’s “lower prior highs” at 2340.00. Otherwise, already having probed above the pre-10:15 high, exiting the bias environment under the 2338.00 bias-down target would prevent 2353.50 from becoming “unfinished business above.”

Strong-handed buyers step aside.

The open quickly pierced yesterday’s 2347.50 low by several ticks and then bounced up to 2351.75. But only briefly, as a deeper drop tested 2341.00. Its reaction up attacked yesterday’s lows as resistance, but resolved down again. This time, much deeper, down to 2334.75.

Yesterday’s opening setup, afternoon bounce and positive close all indicate that strong-handed sellers are marginalized. And yet another downleg is developing in reaction to headlines. That’s the behavior of impatient weak-handed sellers.

The near-term effect on price can be indistinguishable. Down is down. How far down and whether it stays down makes the difference.

Exiting the bias environment back above its 2343.50 bias-down target would confirm that strong-handed sellers remain marginalized. It might also start to suggest that strong-handed buyers are attracted. Otherwise, not yet rejecting these fresh lows would suggest much lower levels are in-play, essentially 2327.00, 2321.00 and potentially 2311.00.

Opening surge marginalizes sellers. Sort of.

If the open wasn’t already in decline, then the market is likely bottoming. Not necessarily rallying, but at least attracted up to 2364.50 instead of down to fresh lows.

And that’s regardless of having surged from the 2354.00 open up to 2360.00, and then already eking higher to test 2363.00. If anything, such aggressive behavior so quickly from essentially unchanged is ripe for retracement — it attracts more impatient weak handed buyers than patient strong hands.

So, as we discussed during this weekend’s Saturday Review, the bigger picture points up. But now a lot of room has been created to absorb selling pressure without it damaging the chart, which a healthy rally would likely exploit. It’s not required, but a pullback to 2355.75 or 2351.50 can’t yet be dismissed.

Post-open volatility holds unchanged, like the overnight action.

The overnight plunge had been retraced entirely to its ~2356.00 origin well before the open. The Employment Situation report’s reaction had a similar resolution. It was greeted at 2352.50, blipped-down to 2345.50, and then greeted the open back at 2352.50.

As if to reward the dual recoveries’ sponsorship, the open quickly surged up to the 2357.50 bias-up signal. But the reward was actually a trap. Its resistance held as was expected. And its reaction slid sharply to 2347.00.

Ultimately, both bias signals held their tests. No-bias triggered, but no offsetting test of the other bias signal is in-play, because both have been tested. The balance of the bias environment has become very unreliable, especially being equidistant between its signals.

Meanwhile, holding a test of the bias-down signal does go a long way to neutralizing sellers. Only to ensure recovering a morning break, and not far enough to ensure the same this afternoon. Vulnerability to a new downleg targeting 2311.00 can be overcome only by recovering 2357.50 through a relevant window.