Post-open Review

Post-open plunge only erases opening gains.

The overnight range was already flat-to-slightly-higher. The 2587.75 bias-up signal was briefly probed several times. A more obvious effort began within 90 minutes of the open. That was during the window of vulnerability — i.e. How valid can a breakout be if the entire overnight range was poised but never did so.

So, a fresh post-open high to 2597.50 was reversed down sharply, and a lot. Bias-up didn’t trigger, putting into play an offsetting test of the 2566.50 bias-down signal. Already the sharp reversal has extended down to 2573.50. More important is the fresh low printed AFTER 10:15, which helps to confirm its direction.

Meanwhile, the fresh low is coinciding with obligatory support — that is yesterday’s reaction down into the futures close at 2573.50-2575.00. Its reaction is bouncing to test 2585.00.

Back under 2580.25 and 2577.75 would likely resume the decline. And although a bigger bounce is possible, it’s too late to recover the bias-up signal in time to avoid triggering it.

Neither bullish scenario tracked away from the very bearish one.

The narrow overnight range allowed for a false break lower to stretch the rubber band, and then to snap back up into the bias timing window. But 2632.00 was probed down to 2628.50 before the 60-90 minute pre-open false break window opened. So, the open’s blip-down couldn’t qualify as a false break either. And its reaction up to 2638.00 became the trap — for longs.

The other bullish scenario would have neutralized Thursday’s “unfinished business below” at 2625.25 and recovered Thursday’s 2627.00-2629.00 prior lows in time to trap sellers. But the post-open reaction up to 2638.00 ran out the clock for that tight maneuver.

Neither of those bullish scenarios were assured to produce more than a retest of Thursday’s high, although they could have extended. But the bearish scenario isn’t likely to be so restrained. Natural support at Wednesday’s 2605.00 cash session close is already being attacked. Last week’s lows are 10 points lower, and the prior Friday’s low is another 10 points lower than that.

There’s no bullish reason to have retraced Thursday’s rally back to its origin. Any interim bounce before extending down is likely only obligatory and temporary. Closing back above 2620.00 could still dismiss today’s drop as being a function of global illiquidity.

Late start to fresh highs may lack sponsorship.

Rallying this morning was likely to begin early. But rallying early wasn’t any likelier to be maintained. The overnight rally put that to the test. Immediately spiking up 7 points to probe overnight highs up to 2624.00 didn’t extend higher. It was retraced and reversed down to 2609.50.

That was still positive territory. And the 2625.25 bias-up signal wasn’t touched, so an offsetting test of its bias-down signal wasn’t put into play. The open was volatile enough not to form a “dry cleaners morning” setup.

Now the morning is rallying late.

The 2634.50 bias-up target is being probed by nearly 7 points. It wasn’t in-play, so anything above 2625.25 is “no bias trending” that requires being retraced. Its retracement could extend down to the 2617.00 10:15 print. Overbought RSIs at 2641.25 will either delay that, or else require a recovery.

Finally rewarding yesterday’s failed rubber band stretches is normal. Surging to compensate for the delay is normal. The delayed timing is only borderline normal, but that can be corrected by retracing its no-bias trending. Regardless, not trending down into a seasonally bullish weekend is normal, regardless of rallying.

Choppy open is contained within choppier overnight range.

The 2600.00 overnight low was retraced steadily to test the 2624.00 overnight highs. Up to 2625.25, whose recovery through the open would have been bullish. Econ reports triggered blip-up to 2627.00 that reacted back down to attack overnight low.

That was all pre-open, Yet it pretty much describes all post-open action.

Bouncing to the 2621.25 bias-up signal and dropping to the 2606.50 bias-down signal each were probed by a couple of points. On their first time. Retesting he bias-up signal got to 2626.25. Its reaction down retested 2606.50.

Ultimately, no-bias triggered. Having tested both bias signals already, neither requires a retest. But either should define that end of the window if tested.

Should.

The 2606.50 bias-down signal is being probed again now, during a no-bias environment, like yesterday afternoon’s no-bias trending. Which collapsed. And this probe is now testing 2599.00.

Overnight rally’s gain disappears, with consequences.

Extending 21-22 points highs overnight to attack 2680.00 had created a relative low at 2669.00. It was the reaction down from a fresh high that was, itself, recovered to a higher high. As I described during the Market Tour, there was no bullish reason to revisit it. Not holding its test through the open would be difficult to recover, if not also signal momentum reversing down.

It was already being probed before the open, down to 2666.00. The open’s blip-up attacked the 2671.00 bias-up target to within 1 tick, near enough in this environment to consider it tested. Its reaction down avoided triggering the 2663.75 bias-up signal at 10:15. Offsetting tests of BOTH bias-down parameters was put into play.

The signal has been productive since triggering, extending down to 2652.50 through the first hour. This didn’t prevent a bounce to 12-point 2664.50, but that doesn’t invalidate the bias signal. Which is exactly the point of the signal, to identify the contextual bias — that bounces are likely to resolve down.

So, the latest bounce is trying to resolve down now. Back above 2666.00 when the bias environment begins lapsing at 11:30 would give the recovery another chance. But meanwhile the likely resolution is down, to test 2648.75 if not also 2637.75.