Post-open Review

Short-squeeze finds an opening.

Hovering at overnight highs suddenly broke higher at the 2370.00 open. Surging soon extended through yesterday’s to 2379.00. Consolidating around the 2376.50 bias-up target exceeded it at 10:15 to renew the bias-up. The 2381.25 renewed bias-up target is being tested now.

2381.25 is only being overlapped, and not yet exceeded. There’s room for noise up to 2383.75, which need not be touched. But reversing down will be difficult until 3-minute RSI is stops being persistently overbought.

Is this the short-squeeze that yesterday afternoon had threatened? The vulnerability was there. And nothing prevented extending higher this morning. Meanwhile, headlines are the catalyst for this morning’s surge (Fed speaker Bullard keeps door open to QE). That’s artificial, and more easily reversed than an organic short-squeeze.

This afternoon’s bearish WedEX will be greeting an artificially inflated rally. There’s no assurance of it being influential, or the degree of its influence, but there’s plenty of room below.

Low opening print still attracts buyers.

Opening above yesterday’s 2354.50 low would have been very bullish. Sellers would have been isolated to the overnight, and a muti-session low could have begun forming. A short-squeeze today would have been very likely.

Opening under yesterday’s low at the 2352.75 bias-down signal wasn’t bearish if not triggered. In fact, it almost immediately launched 5-6 point surge. That was retraced, as was the next, but ultimately another surge extended to the 2361.25 bias-up signal.

The test’s timing invoked the grace period, which resolved up. The 2368.25 bias-up target is now being attacked to within 3 ticks. It won’t become “unfinished business above” if left outstanding. That objective is a calculation. There’s also a structural objective, yesterday afternoon’s 2369.75 bias-down signal that broke prematurely and requires a retest.

Being in proximity of 2369.75 helps its attraction. So does the post-open ongoing series of higher highs and higher lows. Only 1-minute RSI is diverging negatively, so it’s not bearish. The difficulty with extending higher is due to “higher prior lows,” since still no prior high has been recovered.

Reacting down has room to 2360.00 before beginning to signal a deeper pullback underway. Yesterday’s 2354.50 low would be one objective, then potentially 2350.25 before resuming the decline.

Overnight lows probed into and out of the open.

Overnight bouncing from its 2379.25 low had touched the 2388.75 bias-down target as resistance. That immediately launched a reaction down to fresh lows at 2376.00 just before the open.

Bouncing 8 points through the open attacked 2384.00.  Almost any higher would have started reversing momentum up. Holding it would be likely to produce fresh lows. Which is how the first half-hour resolved, attacking 2372.00.

The next lower objective under 2375.00 has been the 2370.00 area, which was tested in the past several minutes. RSIs diverged positively, and the prior low was being overlapped by the same an hysterical extreme. Things could get worse, but a near-term pause for the market to catch its breath could allow the rubber band to snap back up from here.

An inflection up above 2374.50 would be credible for extending higher. Reversing up relentlessly is always unlikely, even less so here. But 2369.75 may need to be broken before suggesting this morning’s action will bleed into the afternoon.

Pre-open surge repels reinforcements.

Greeting the open at 2404.00 blipped-up to within 2-3 ticks of the 2405.00 attraction. Its immediate reaction quickly slid 4 points down to 2400.50. Still testing the 2401.00 bias-up signal up to 2403.00 invoked the grace period.

That was also a test of yesterday’s lower prior highs. But its first reaction up wasn’t exploited. This didn’t make resolving down any likelier. It did make a resolution down likelier to be substantial.

And it resolved down. No-bias was triggered, putting into play an offsetting test of the 2392.75 bias-down signal. Already, the 2396.25 overnight low is being retested.

The setup at yesterday’s close was vulnerable to reversing down at any time, but probably not without first rejecting a fresh high. Both parameters are playing out, albeit on a smaller scale. Recovering from fresh lows to probe fresh highs remains likely.

Quick rally retests the high.

If the gap up were going to extend, it was going to extend quickly. That was the Market Tour’s expectation, and the reason for being inclined to get long early. In fact, gapping up above 2392.00 extended immediately and relentlessly until touching last week’s 2400.00 high.

Hesitation at 2400.00 is probably only obligatory. Although 1-minute RSI is diverging negatively, 3-minute RSI is persistently overbought, which often produces at least one more fresh high print.

That’s one more fresh high print for this leg, but probably not ultimately. The prior high’s retest should visit 2405.00, and probably also 2415.00 to compensate for the delay.

A new high close remains outstanding as ‘unfinished business above.” Even the open’s relentless surge doesn’t ensure closing higher today, so we’ll continue monitoring for a possible short-entry.