Post-open Review

Open breaks under the overnight range.

Having probed Friday’s high overnight, exiting the open under the earlier Globex low would trigger a Globex-flip setup. The 2814.00 overnight had reacted down to test the 2798.00 earlier Globex low down to 2795.00. So, the Globex-flip setup had formed.

But did it trigger?

The 2798.00 earlier Globex low was still being overlapped as the opening 15 minutes of volatility lapsed at 9:45. The setup has no grace period, but it’s optimal to have resolved by then. Price soon collapsed down to 2785.00, and its reaction up didn’t threaten to recover 2798.00 (it was just attacked, much later, to within 2 points).

The Globex-flip setup’s influence would point down through this morning — and if not already reversing up through this afternoon, then down through at least tomorrow morning, too. The minimum likely near-term objective is 2784.00 (now being tested down to 2781.25), and for having delayed its test, probably also 2773.50.

Otherwise, back above 2795.50 would start to signal the bearish setup’s influence was overwhelmed, targeting a retest of overnight highs.

Overnight dip recovers before the open.

Sideways ranging at yesterday’s late 2737.50 low didn’t break lower overnight until Europe’s opens. Then it broke a lot lower, touching what is this morning’s 2729.25 bias-down target. I noted in the First Trade blog post and during the Market Tour that any remaining potential for a morning rally largely depended on that being the low.

More so, the open would need to be greeted in rally mode.

Soon bouncing off of 2729.25 spiked up to 2740.00 on China trade headlines. The open was greeted at what is this morning’s 2736.75 bias-down signal. A quick blip-down held 2734.00 support before resuming the pre-open recovery.

After holding a test of the bias-down signal, triggering no-bias put into play an offsetting test of the 2744.75 bias-up signal. It was tested on the way up to 2748.50 — which is resistance from yesterday’s rally. It’s also no-bias trending, since the bias signal should define the window’s range if tested.

A dip to at least 2744.75 is required (now being tested). Resuming the rally is also likely, and likely to extend higher, whether to test this morning’s 2751.00 bias-up target or to retest yesterday’s highs. Neither of which is required, but the burden of proof is on sellers.

Bias-down avoided at the very last second.

The open’s 5-point was relatively narrow within 2734.00-2739.00, especially compared to the two prior sessions. But it was overlapping the 2734.75 bias-down signal in time to invoke the grace period, which lapsed at 2729.25…

Or, did it lapse at 2740.00? The 11-point difference is the spike up triggered by a Trump China trade tweet. Bias already wasn’t clean, but the tweet prevented a “clean” late bias-down.

Being a tweet reaction, we anticipated its retracement. We also discounted its influence. We also noted that a trade already underway hadn’t violated its bounce limit’s first 3-4 minutes. And now fresh lows are testing this morning’s 2727.75 bias-down target.

The trade already underway was targeting a couple of ticks lower, which is also fulfilled — down to 2725.25. RSIs are avoiding oversold territory, which is NOT a buy signal, but which also allows a buy signal to be very productive.

The nearest buy signal currently is back above 2731.25, preferably triggered this morning to exit the bias environment in rally mode. Continuing lower would still have potential down to 2707.00 (i.e. 2701.50-2708.50), if only to absorb the tweet’s reverberations.

Gap up is retraced.

Gapping up doesn’t qualify as “almost literally exploding higher.” Actually extending higher post-open would have qualified, but that didn’t develop. The 2695.25 opening print was exceeded momentarily up to 2698.00 — which also probed the 2697.25 pre-open high — but the first half-hour otherwise trended down.

Not exploding higher post-open was likelier only a rubber band stretch. Its snap back down rejected both bias-up parameters in the process. The 2688.00 bias-up signal was still being overlapped at 10:15 to invoke the grace period, but it was being probed down to 2684.25 at the 10:30 grace period. Offsetting tests of both bias-down parameters is now in-play.

Having triggered late, no “unfinished business” will be left outstanding below. At least the 2672.25 bias-down signal’s test is likely, but not necessarily its 2664.50 bias-down target. Exiting the bias environment back above its 2694.75 bias-up target would invalidate the downside altogether.

Regardless, this morning’s post-open dip should be only temporary backing-and-filling before resuming the rally. The open’s gap up is a position of strength. The open did fill the gap back up to  last Tuesday’s cash session and futures closes, giving sellers a little more credibility — but another test of last Tuesday’s gap should provide limited resistance.

Flailing about through the open narrowly avoids drowning.

Pullbacks need to hold 2660.00 to maintain upside momentum from Sunday night’s recovery. Trump’s post-close tweet yesterday put that to the test, as did the overnight wild ride up to 2684.00 and back down again.

Pre-open and post-open tests of 2655.00 both tested the 2657.50 bias-down target. Both recovered, ultimately holding both 2660.00 and the 2664.25 bias-down signal through 10:15. Offsetting tests of BOTH bias-up parameters is in-play at 2678.00 and 2686.00.

So far, only 2676.50 has been tested. That’s more than 20 points above the earlier lows. It’s the pre-10:15 high, and has yet to be exceeded, which keeps open the door to reacting down. In fact, its 12-point reaction down to 2664.00 is substantial, too.

The pullback is testing support at the 2664.50 bias-down signal. Back above 2668.50 should resume the rally. Nothing prevents dipping any deeper first, but there’s no bullish reason to revisit 2660.00. And exiting the bias environment at 11:30 back under its 2657.50 bias-down target would invalidate the upside objectives that were put into play earlier.