Post-open Review

Overnight range is persisting.

Yet another attempt to probe above 2667.25 failed before the open. It reacted back down to unchanged at the open, and pierced the overnight lows during the opening 15 minutes of volatility. Its 2663.25 retest held, while RSIs diverged positively.

Bouncing back above the open stopped 3 ticks short of the 2667.25 bias-up signal, triggering no-bias. Too late to trigger, and too late to invoke the grace period, 2667.25 was touched in time for breaking through 10:30. No-bias would have been invalidated. It held.

All of which suggests that 2667.25 is this morning’s upper-end. Which suggests the morning will include some sort of reaction down. Which could be a test of 2660.50, or of the 2657.75 bias-down signal.

No-bias suggests the window will be contained within its signals that had failed to trigger. Probing higher anyway is called “no-bias trending.” It would be doomed to failure, but could meanwhile test the 2673.00 bias-up target.

Since RSIs didn’t deteriorate or diverge into the test of 2667.25, sellers aren’t impressive. They didn’t exploit the open’s opportunity to reject the overnight range. I’m giving “no-bias trending” a benefit of the doubt — a fresh high just touched 2669.00 — fully expecting its ultimate retracement, with little reliability from where and when.

Pre-open implosion explodes higher post-open.

The knee-jerk reaction to the pre-open pipe bomb had plunged 5 points from 2657.25. Because of its catalyst, the plunge was likely to be retraced entirely. Hovering pessimistically short of the plunge’s origin was potentially bullish from a contrarian perspective. And “unfinished business above” at 2660.50 was outstanding above.

All of which combined to absorb the retail crowd’s post-open knee-jerk reaction down. It was much shallower and only touched the 2654.50 bias-up signal. The opening 15 minutes of volatility had not resolved up, but a surge soon tested 2660.50 to within 1 tick. RSIs essentially diverged negatively on its retest. There is no other unfinished business above.

Exceeding 2660.50 through 10:15 would have renewed the bias-up signal. It held. This is still a bias-up environment, capable of extending higher. Back above 2659.75 would start to signal the rally extending, next targeting 2667.25. Back under 2656.50 would have room to test the 2654.50 bias-up signal as support during the bias-up environment, and much more room afterward.

Payrolls reaction saps remaining optimism.

The overnight rally up to 2649.50 had reacted down to within 1 tick of this morning’s 2645.25 bias-up signal well before this morning’s Employment Situation report. A bounce greeted the news within 3 ticks of the pullback’s origin. Its reaction surged up to 2652.00.

The open’s dip retraced the reaction back down to its 2648.75 origin. Snapping back up only touched the 2651.25 bias-up target before dipping again. And again. Lower and lower to 2646.50, holding 2647.75 through the opening 15 minutes. But still more than 1 point above the 2645.25 bias-up signal. Which then triggered at 10:15.

This is a bias-up environment, whose target has been met. Being bias-up still allows trending through the bias-up target, which isn’t required to hold as resistance during a bias-up environment. That doesn’t normally happen, except to probe temporarily higher and retest overnight highs or “higher prior lows.” But this being Friday and its bias signal likely to persist through the noon hour, fresh highs would be credible for extending.

Meanwhile, the open’s range is defined as 2647.75-2648.00 support and 2650.25-2651.25 resistance. This range has contained and restrained trending efforts. There is no momentum in either direction, or any attraction in-play. Exceeding either end of the open’s range through a relevant timing window would be likely to trend in that direction through the close.

Rolling front-month coverage forward to Mar this afternoon.

[Mar is trading at a ~2.50 premium to Dec] The overnight drop had extended down to 2626.50 (basis Dec) just before the open. RSIs didn’t get oversold, so the open’s retest didn’t diverge positively. That didn’t prevent rallying back to unchanged at 2629.25, and then extending higher to the 2631.75 bias-up signal.

Fluctuating around bias-up at 2629.50-2632.50 invoked the grace period. Bias-up triggered decisively at 10:30. And it has extended up to 2635.00 while taking RSIs overbought.

The bias-up target in-play is 2639.25 (2641.50 basis Mar). Just for having retested intraday yesterday’s “unfinished business above” at 2635.50 enables a sell signal to be productive — despite being short of the bias-up target.

I’m viewing this bounce as counter-trend, and likely to resolve down. Already testing the 2635.50 unfinished business above overnight has resolved down to open in negative territory. Triggering bias-up and retesting 2635.50 intraday don’t reinforce the bearish assumption. Regardless, entering the noon hour back under this morning’s bias-up signal would at least be likely to delay further upside.

Mini-surges and mini-collapses.

The open quickly surged above this morning’s 2626.00 bias-down signal to test 2631.00. It was quickly retraced back down to 2626.00. Another surge tested 2632.00 before collapsing back down to 2626.00. A shallower bounce was retraced entirely, too.

2626.00 didn’t hold that time as the collapsed extended to touch 2624.00. But the swings persisted, and now another surge is retesting 2631.75.

We knew the equilibrium environment meant that widely disparate opinions would be expressed  to move the market sharply, both up and down. But we weren’t expecting six 5-6 point moves so quickly. Nevertheless, an offsetting test of the 2635.50 bias-up signal is in-play, and it’s being attacked to within 2-1/2 points. We’ll monitor for its potential to reverse back down.