Post-open Review

Complete recovery holds up.

The overnight dip to 2575.50 had recovered to touch Friday’s 2582.75 futures close. The open’s surge soon extended higher to Friday’s 2585.00 cash session close. Also being tested was the 2585.50 bias-up signal’s resistance, and it was meanwhile holding. Lackluster momentum kept the post-open rally vulnerable to reversing down.

But sellers never exploited the hesitation — neither the open’s hesitation, nor the bias signal’s grace period. Another surge broke higher to trigger late bias-up, and now its 2590.50 bias-up target is in-play.

All of which is new highs. And none of must be maintained through the close. A new high close would fulfill the outstanding requirement, but that doesn’t prevent a downdraft. Nevertheless, the rally’s momentum remains intact.

Tepid optimism ahead of payrolls finds tepid selling after it.

That optimism ahead of this morinng’s Employment Situation report was ineffectual, after all. Yesterday afternoon’s late rally to fresh highs, its failure to close above a prior high, and the shallow overnight range hovering around those highs. All optimistic, but ineffectual.

Contrary, or not, sentiment hasn’t been extreme. So, neither has its reactions. Post-open price action hasn’t flat-lined, but it remains contained within the range defined by yesterday’s late surge.

There was some possibility of trending earlier. The pre-open news triggered a blip-up that pierced the 2580.50 bias-up signal by 3 ticks. But it reacted down immediately, back into the overnight range and under yesterday afternoon’s highs to 2577.00. The 2579.00 open collapsed to test 2574.00, back toward yesterday afternoon’s lows.

Now 2577.00 is holding tests as resistance. No lower objective is in-play — the bias-up signal’s test was rejected pre-open, not post-open — but a dip to 2571.50 is becoming increasingly likely until recovering 2578.00.

Recovering to a lat open fails to attract reinforcements.

The overnight drop to 2553.50 was retraced entirely to greet the open at yesterday’s 2576.00 cash session close. Isolating the probe under yesterday’s 2571.50 low would be bullish. There was ample positioning and proximity to trigger a fully-formed bullish isolation setup.

Of course, NOT triggering an an otherwise fully-formed setup can be as bearish as it would have been bullish. And the isolation setup would have been pretty bullish.

Hovering at unchanged at least didn’t reject the recovery. It just never extended higher. Buyers must be sought at lower levels , which was risky because of an air pocket under yesterday’s 2571.50 lows. Ultimately a collapse retraced the overnight recovery entirely down to a fresh low at 2562.25. The 2564.50 bias-down target was still being touched at 10:15 (within 1 tick within 1 minute) to avoid renewing the bias-down signal.

Now bouncing to attack 2669.00 is trying to isolate another test of 2563.75. Exiting the bias environment recovering its 2570.50 bias-down signal would suggest another upleg is underway. Back under 2565.75 would instead resume this morning’s decline, and set a much different, bearish tone leading into Friday’s payrolls.

Open’s uptrend entrenches the rally.

Pulling back from the 2584.00 overnight high greeted the open at this morning’s 2581.50 bias-up target. Its reaction down had room down to 2580.00 without even threatening to reverse momentum. Touching 2580.00 reacted up to fresh high new highs at 2585.50.

Exiting the opening 15 minutes of volatility above its opening print formed uptrending. If not extended higher this morning, then that serves as an anchor to attract a dip’s recovery. Exceeding the 2581.50 bias-up target through 10:15 would have renewed the bias-up signal, but it was being touched to within 1 tick at 10:15.

There’s no grace period for renewing the bias-up signal. This is still a bias-up environment. A deeper pullback could test this morning’s 2576.00 bias-up signal as support. Meanwhile, back above 2584.00 would renew the rally’s momentum — although it’s difficult to attract reinforcements after gapping up so much when the FOMC statement is getting closer.

Opening surge or dip prevented by post-open hovering.

Having extended the pre-open recovery up to 2573.75, almost any opening strength would have been credible for extending higher. Alternatively, Greeting the open at overnight highs allowed a quick dip to stretch the rubber band and snap back into recovery mode.

But the open did neither, instead impersonating Wile E. Coyote skidding off of a cliff. Dipping to 2571.50 held there for several minutes instead of snapping back up. Inertia was not helpful at this stage of the recovery attempt, and as with Wile E. Coyote, gravity eventually took over. Fresh lows dipped deeper back into yesterday afternoon’s range, no longer in character with a temporary rubber band stretch.

Touching 2569.00 did trigger a reaction up to 2571.75. Its recovery through 10:30 would have been the final — albeit least reliable — opportunity for signaling that sellers were done. Any higher any later could still extend, but its likelier that the balance of the morning range sideways, if not also retest 2569.00.