Post-open Review

Pre-open pullback bounces back into the range.

The 2805.25 overnight high had formed into and out Europe’s opens. Its reaction down ultimately probed earlier overnight lows down to 2792.50. That was a retest of the bias-up signal 1 point higher. And it was pretty late to be suggesting a reversal down.

The open easily rejected the overnight dip. The 2793.50 bias-down signal’s immediate test reversed up sharply to pierce the 2801.75 bias-up target.

Reacting down has been testing 2795.25. Now it’s being probed by 1 point to signal reinforcements have arrived. Even during the bias-up environment (whose bias-up target is already met) fresh post-open lows could temporarily test 2789.00 and still be able to recover. Otherwise, back above 2798.00 would start to signal fresh session highs underway.

Payrolls reaction trends up sharply.

Gradually firming to probe yesterday’s intraday high up to 2747.00 had once again been retraced to and through its origin. Actually, pessimism pushed price back down 11-12 points before the Employment Situation report. Then the newly stretched rubber band snapped back up. Hard.

Spiking to overlap the 2758.00 corrective bounce objective attacked 2764.00, ranging sideways into the open. A post-open setup identified support at 2757.00, whose test held through the opening 15 minutes of volatility. Recovering 2761.00 then confirmed the pre-open rally had resumed. The next higher objective at 2770.00 was tested, too. It’s now being exceeded by more than 4 points.

Keep in mind that sellers can’t be marginalized today. They might not be influential or productive, but they remain a threat. It’s too soon to indicate whether the bearish distributive template is done. It was still influential overnight. It influences behavior, regardless of price levels.

Having tested 2770.00, not also closing above it would maintain the week-long rally being only a temporary corrective bounce. This being a Friday and already testing 2770.00, rejecting it should close back under 2758.00… or lower. Otherwise, entering the noon hour above 2770.00 would start to suggest the distributive template is not influential.

We’re staying with Mar ES for an extra day before rolling coverage forward to Jun, which is my practice when a new extreme for a move is forming. For reference, Jun trades at a 5-point premium to Mar…

The biggest question of the morning is the biggest because it addresses the bigger picture. It is the question of whether the bearish distributive template remains influential. Indeed, failed probes of fresh highs have defined the past 3-4 hours. Surging to 2733.50 before ECB, to 2736.50 before the open and retesting it afterward — each time reacting back down into the range — all qualify as distribution.

The last reaction down became the deepest, fully testing the lower-end of 2725.25-2727.75. Along the way down, the bias-up signal’s test at 10:15 invoked the grace period, which barely avoided triggering at 10:30.

Having held tests of both bias-up parameters, offsetting tests of both bias-down parameters is officially in-play. That’s not required, since the signal triggered late, and barely. But now having printed a fresh post-open low after 10:30, down is much more reliable than up. Also, there’s no “unfinished business above.”

So, until bounces stop failing and supports stop breaking, in-line with the bearish distributive template, the likely resolution is down. Resolving dramatically in either direction is still going to be difficult ahead of tomorrow morning’s Employment Situation report.

Expending energy just to avoid a deeper dip.

The more things change… Last night’s gap down to 2700.00 was being attacked by a 9-point pre-open dip from overnight highs. Last night’s reaction to its 2700.00 open extended down 18-19 points. This morning’s reaction to its 2700.00 open has extended up 18-19 points.

The 2717.00 bias-down signal triggered cleanly at 10:15. It was still being overlapped at 10:30 to avoid being invalidated. This is a bias-down environment, whose target has been met. The 2707.00 target need not be retested, and it need not hold if retested. But the window’s upper-end should ultimately be defined by 2717.00, or require its retracement — if not also to its 2710.25 10:15 print.

Meanwhile, I discussed two likelihoods during this morning’s Market Tour: That the post-open crowd wanted to express its own concerns over the same news that had triggered last night’s gap down. And that this was likely from testing 2713.25, if not 2718.75.

The session’s first 45 minutes was a 7-point choppy range around 2713.25. Now a late surge is probing 3 points above 2718.75. It’s already required to retrace back down to 2717.00, if not also to 2710.25. Back under 2715.25 would start to signal momentum reversing down. Otherwise, maintaining the recovery above 2718.75 would target a probe above yesterday afternoon’s 2731.00 high.

Overnight highs retraced to unchanged.

The bearish template for today is a recognition of the rally being intact. This may prove to be a temporary correction, but its series of higher highs and higher lows was maintained through yesterday’s close. Yesterday’s peak met and held the correction’s 2727.75 limit, but it wasn’t rejected by reversing down into the close.

So, reversing down could be done either by rejecting probes above yesterday’s highs, or else already gapping down. Overnight news produced a probe above yesterday’s highs up to 2734.50, which the open retraced — first to 2720.00 and then to 2717.50. The 2727.75 bias-up signal didn’t trigger.

And still the series of higher highs and higher lows remains intact.

More so, the retracement filled the gap back to yesterday’s close. And held it, through the open. That was the time for sellers to have broken under the prior close, or to have delayed testing it at all. Testing it and holding it through a relevant window like the open undermines sellers. In fact, an 11-point bounce just tested 2727.75 as resistance (too late to trigger, or to invalidate that it didn’t trigger).

Even if we knew with 100% certainty an offsetting test of the 2704.75 bias-down signal will be fulfilled today, the path there is not assured. This bounce up to 2727.75 could extend to 2731.00-2732.00. Back under 2723.00 first would start to signal another downleg underway already.