Post-open Review

Breaking too much resistance, too quickly.

Potential for noise above the overnight high’s China trade new reaction was attacked (to within 1 tick) at 2765.25. Its reaction down was underway already to greet the Employment Situation report at 2756.50. The reaction continued trending down into the pre-open’s test of this morning’s 2747.75 bias-up target as support.

Still well above yesterday’s 2741.25 highs. But the post-open bounce only retraced the payrolls 2756.50 origin, and resumed its reaction down. The 2740.50 bias-up signal triggered cleanly, only to be invalidated by breaking under it decisively through 10:30. Offsetting tests of the 2731.75 and 2721.50 bias-down parameters weren’t required, but they were met (to within 1 tick) anyway. Oversold RSIs require the low’s retest.

All of which sliced through “lower prior highs” at 2737.00-2738.25. They would usually be allowed to influence the drop. Lower lows remain possible, especially so long as bounces now hold 2733.75 as resistance (being tested now). But a bigger corrective bounce would have room up to 2741.00-2743.00.

Back under 2727.75 and 2725.25 would start to signal the decline extending — especially during the bias environment lapsing and noon hour entry. This is Friday, so Friday Factors apply, like the morning’s bias signal persisting through the noon hour.

Astonishingly wide opening swings and THEN news.

The open was greeted at 2720.50 and extended post-open to within 5 ticks of the 2727.25 pre-open high. That also tested the 2725.25 bias-up target, and its reaction quickly fell to 2712.00. Then a slightly shallower bounce fell to 2707.50. Both bias-up parameters were well on their way to being rejected.

Then came a Trump tweet, favorable to China trade negotiations.

The reaction was nearly immediate, returning to the 2725.25 bias-up target. That triggered the 2717.75 bias-up signal, bias-up target met. This is still a bias-up environment, and the bias-up signal has held as support. Fresh highs are testing 2732.25.

Back under 2724.50 (being touched now) would start to signal another downdraft. Further downside during the bias-up environment should be limited to testing the 2717.75 bias-up signal as support — and then be vulnerable to retrace the headline reaction back to session lows. Back above 2728.75 (also being tested now) should instead resume the rally with potential to 2741.00.

Overnight rally extends sharply higher.

The overnight rally eventually extended to probe above Monday morning’s 2707.00 high up to 2715.75. The post-open dip held a test of 2707.00‘s “lower prior high” to establish a position of strength, and back above 2714.00 signaled the rally resuming.

That test was recovered to exit the first 15 minutes of volatility probing back into Thursday’s 2716.50-2724.00 range, without yet rejecting it, adding to the position of strength. So, any reaction down would be considered only temporary.

But there wasn’t much weakness, as the post-open rally extended sharply higher to 2729.25. A close-quarters Double Top there has reacted down to 2714.00. Back above 2721.00 would start to signal the setup’s retest.

Fresh highs could next target 2733.00 or 2741.00. Otherwise, having tested 2724.00 intraday, not closing above 2724.00 would suggest that a corrective bounce was ending.

Opening reversal attempt’s failure launches surge.

Probing yesterday’s high and then opening back under the earlier Globex low would have formed a bearish Globex-flip setup. But overnight action never probed yesterday’s high. Never came close.

We gave the setup a benefit of the doubt anyway. A quasi-Globex-flip. Yesterday’s 2707.00 high was so much higher after the afternoon plunge to 2603.00 and closing at 2643.00, and overnight action was still substantial up to 2663.00.

And the 2636.25 earlier Globex low was being tested at the open. Interestingly, it was tested down to this morning’s 2633.50 bias-down signal.

The open’s test of the 2636.25 earlier Globex low held. Well before the opening 15 minutes of volatility had lapsed, it was clearly holding. So, we assumed it wouldn’t trigger. And we assumed what we would have assumed even if not a quasi-Globex-flip setup, that the resolution would be as bullish as the setup would have been bearish.

And the first half-hour tested 2675.00. Interestingly, the 2667.25 bias-up target was still being tested at 10:15 to avoid renewing the bias-up signal.

Being a bias-up environment, there is room down to its 2652.00 bias-up signal. Probing under it during the bias-up window, or until coming within view of it lapsing, requires being retraced, and is just generally more difficult to extend down. Probing it down to 2646.50 has reacted up 10 points to fluctuate around 2652.00.

Breaking lower as the bias environment lapses would be credible for extending, and putting back into play what the open’s bounce prevented — retesting yesterday’s lows if not also resuming the decline. Otherwise, back above 2660.00 would start to signal another rally leg underway.

Overnight rally extends post-open.

The overnight rally had attacked 2701.00 before correcting 10 points, and holding there into the open. A post-open dip touched its minimum objective at 2687.25 and then snapped back up 20 points to fresh highs at 2707.00. Any higher would next target 2712.50, 2715.50, and then potentially above 2723.00.

All from a position of weakness.

That weakness is from still overlapping Friday’s 2692.00 high through the opening 15 minutes of volatility. It wasn’t rejected, which probably would have avoided higher highs altogether. But still testing it at 9:45 did not reflect strong-handed sponsorship.

The position of weakness meanwhile doesn’t require extending to any next higher target. Maintaining a break back under 2700.25 (being tested now) should at least retest the open, regardless of its eventual resolution.