Post-open Review

PROGRAMMING NOTE: I am away from the screens during today’s noon hour and into the afternoon bias environment, then back through the close.

The open was greeted by a shallow dip back down to the 2242.50 bias-up signal. Post-open action then steadily recovered up to the 2247.25 bias-up target, new highs.

Reacting down wasn’t recovered in time to renew the bias-up signal. This is a bias-up environment, whose target has been met. Renewing the bias-up signal would have next targeted 2252.50. Extending higher isn’t precluded, it’s just not required.

Fresh highs have touched 2249.00. Not extending higher could range sideways through the close. Or, not extending higher could reverse back under 2242.50 when the bias environment begins lapsing at 11:30 and slide into the weekend.

Potential for reversing down remains alive today for a new reason: Holding a test of the bias-up target. So, before having exceeded the bias-up signal at 10:15 to trigger it, its buying pressure was satisfied. This reflects impatient buying, which is not in itself bearish — unless even less patient buyers arrive to absorb the impatient buyers quickly becoming impatient profit-takers.

No real follow-through, or rejection.

Pre-open action during Draghi’s remarks and Q&A was atypically shallow, both up and down. Yesterday’s 2241.25 (basis Dec, 2236.00 basis Mar) high was barely pierced, twice, neither time reversing down. Fresh post-open highs attacked 2244.00, but reacted down 7 points. While failing to trigger the 2240.00 bias-up signal at 10:15, no reversal down has emerged.

And 2240.00 continues attracting price to it even now. A break higher could probe fresh session highs, as “no-bias trending” that would require being retraced. Although some sort of follow-through to yesterday’s rally is likely, this morning’s higher highs would suffice if not reversed before the noon hour. Meanwhile, back under 2236.50 would have room to the 2232.25 bias-down signal without yet requiring any retracement up.

All prices above are basis Dec, which is trading at a 5.25 premium to Mar. We’ll switch to Mar when the morning bias environment has lapsed.

Barely triggered grace period for bias-up.

Opening range developed for so long that its eventual break higher came far too late to trigger the 2113.00 bias-up signal. But a late surge’s errant tick did barely touch 2113.00 within 3 minutes of 10:15 to invoke the grace period through 10:30.

Anyway, yesterday afternoon’s rally gained traction, so this morning is likely to trend up. So, probing above 2113.00 at 10:30 would be bullish in two regards. Not yet probing higher by then would be bearish — at least providing context for any higher highs to resolve poorly.

The late extension high, and surging only to 2113.00 and the overnight high, suggest that optimism still hasn’t become excessive. And from a contrarian perspective, that still suggests more upside.

Gap up fails to materialize.

Gapping up to and/or through yesterday’s highs would have launched uptrending into the afternoon. Pre-open action tried to deliver, but didn’t. Probing up to 2209.00 as retraced to greet the open back above yesterday morning’s highs.

But the open was greeted back at yesterday’s late 2206.00 high. Which could have recovered through the open to qualify. But the open only slid deeper, testing 2201.50.

Neither 2198.50/2207.75 bias signal was touched before signaling no-bias. Neither has been touched since. While there was room to dip slightly deeper without targeting lower lows, it’s not required. So, if this is the range’s lower-end, then its upper-end can now be attacked.

Exiting the bias environment when it begins lapsing at 11:30 above 2206.00 and 2207.75 would keep the door open to an afternoon rally. But delaying a rally leg much later — let alone delaying at least a recovery to the range’s upper-end — would open the other door wider to a deeper dip targeting 2195.50.

Surge resumes in time to confirm.

Gapping up to 2201.50 immediately touched the 2200.75 bias-up target. Exceeding it at 10:15 renewed the bias-up signal next targeting 2207.75. Actually, 2207.75 was already tested at 10:15 — twice, as high as 2208.75, but only overlapped. This is not a doubly-renewed bias-up environment.

Nevertheless, this being a bias-up environment, the window can range back down to its 2195.00 bias-up signal as support. A simple corrective dip would target 2202.50, with room for noise down to the original 2200.75 bias-up target. Last Wednesday’s 2210.25 anchor all but requires a retest. Its test should be the reward for returning to within its proximity after probing fresh lows, after finishing this morning’s pullback.

Any deeper of a pullback would tart to suggest today’s upside is done. Recall the premature surge ahead of Europe’s opens that I mentioned earlier? Well, it is now joined by the pre-open reaction down barely attacking Friday’s 2197.25 high to within 3 ticks, and to within 2 points post-open.

The impatient buying doesn’t prevent the upside momentum from expanding, but it makes that less reliable. And more so, it is undermining the upside durability.