Post-open Review

Surging back to prior failure levels.

This morning’s Employment Situation report was greeted by an 11-point pullback to 2476.00, that was firming back up to 2480.50. The knee-jerk reaction attacked 2470.00 a couple of times, while consolidating more and more narrowly around 2480.50.

Opening higher soon extended back up through overnight highs. Touching yesterday’s 2489.00 intraday high maintained its recovery through the opening 15 minutes of volatility to avoid undermining the rally’s sponsorship. Soon 2503.00 was being tested.

Another reaction down had potential to form a temporary correction. Temporary, because maintaining the open above yesterday afternoon’s bias environment high has formed a “session-long rally” setup. The reaction’s correction lasted almost an entire minute as Fed Chair Powell said something hawkish that triggered a 6-point spike down to 2487.50.

Powell kept speaking, and subsequent headlines were more rally-friendly, if not actually dovish. A 34-point surge is just tested the past week’s highs around 2521.00.

Reacting down to 2408.50 could develop into a deeper pullback — fulfilling not the target but the purpose of the earlier pullback that Powell’s first headline had hijacked — now targeting 2492.50-2495.50. Back above 2515.00 first could resume the rally, targeting 2525.25.

Pre-open recovery attempt collapses post-open.

The overnight drop had trended flat-to-lower, blipping-down at its low to test 2463.00 before midnight. Bouncing to the range’s 2480.50 upper-end extended higher into the open up to 2493.50.

Resistance at the 2489.50 bias-down target held as price reversed down immediately. And relentlessly. Its likely minimum objective at 2469.50 was soon met, and now also the next likely objective at 2450.50.

1-minute RSI’s higher low is on the cusp of diverging positively, while 3-minute RSI makes a higher oversold low. That’s not a buy signal, but it doesn’t require a retest. Fresh lows attacked 2447.00, and are now bouncing.

Back above 2459.50 would start to signal a corrective bounce targeting 2470.00. Regardless, the decline is free to resume at any time, its next lower likely target being 2425.25.

Sellers not yet rejected.

Monday’s very late price action included a sell signal that was probed under 2494.00 by 6 points (before snapping back up 25 points). Now this morning’s 2468.00 open has produced a 26-point bounce to test 2494.00 as resistance.

And resistance has held. Also being tested was this morning’s 2493.00 bias-down signal, invoking the grace period and ultimately triggering late. Its reaction down is now retesting its 2483.25 bias-down target down to 2482.00.

Sellers weren’t isolated to the overnight, so a recovery can’t yet be dismissed. Certainly not by triggering late bias-down and already meeting its target. Exiting the bias environment rallying back above the bias-down parameters could trend back up to Monday’s 2510.00 highs.

The downside is meanwhile free to resume. Exiting the bias window under its target, and preferably deeper, would suggest that the open’s buyers had expended a lot of selling pressure without gaining traction for their effort.

No improvement to last night’s gap up.

Sunday night’s Globex open had gapped up in reaction to Trump’s weekend China trade tweet. Despite a presumably bullish environment and the tweet’s catalyst, the gap only corrected Friday’s last reaction down. Only firming overnight suggested no strong-handed buyers were coming.

Weak-handed reinforcements could have arrived, their reward being to retest Friday’s high and its borderline overbought RSIs up 2525.25. But 2512.50 overnight high had reacted down to 2501.00, and its post-open blip-up has reacted down to 2494.00.

Nevertheless, this is a bias-up environment, whose 2495.50 bias-up signal should define the window’s lower-end. A bounce back up to the 2504.50 bias-up target wouldn’t be surprising, since 3 of the first hour’s 5 15-minute checkpoints overlapped it.

Lower lows would target filling the gap back down to Friday’s 2486.00-2487.00 close. Delaying lower lows until this afternoon would be less defensible, and could more easily extend down into a collapse.

Opening range struggles to hold yesterday’s high.

Overnight action was comprised of two uplegs and their interim reactions down. Each reaction down has probed back under yesterday’s high. None of which would prevent extending the rally, or resuming it since the rally has yet to extend. But the open did fail to trigger bias-up.

Now an offsetting test of the 2481.75 bias-down signal is in-play, having held a test of the 2502.75 bias-up signal through 10:15. That’s the bias requirement, and already fresh post-open lows are testing 2487.75.

Structurally, no further downside is required before trying to resume the rally. Back above 2503.75 would trigger a retest of the 2519.25 overnight high, probably up to 2525.25. All being doomed to failure for having originated from so low, so late.

Meanwhile, a test of the 2481.75 bias-down signal wouldn’t be required to hold. This being a Friday, any suggestion that the rally won’t resume today could be the catalyst to attract significant selling pressures. A much deeper reversal would become possible.