Post-open Review

But potential for a rogue lower low.

Bouncing off the 2390.50 low up to 2394.25 greeted the open at 2393.00. Immediately, a spike down attacked the overnight low. After briefly pausing, another spike down probed a fresh low at 2387.75.

That’s within the 2387.25-2388.25 pullback potential that was put into play yesterday afternoon. Testing it wasn’t required, but its test is required to hold through a relevant timing window to maintain a near-term objective for fresh highs.

A fresh low has probed the 2387.25-2388.25 range’s lower-end by 1 tick. Meanwhile, the 2389.25 bias-down signal triggered.

Testing the 2384.25 bias-down target would necessarily probe under the 2387.25-2388.25 pullback limit. That won’t be any more bearish, so long as the bias environment exit is back above 2387.25, preferably above it, and above 2389.25.

Alternatively, bias-down could be invalidated. It’s too late to simply recover the signal through 10:30. But exiting the bias environment at 11:30-noon above the 2391.25 post-open high would suffice — so long as a print under the 2387.00 pre-10:15 low is avoided.

A deeper pullback could still recover, and likely would. So could taking longer to fulfill the bias-down target. One or the other would be likely if neither scenario described above has formed by noon.

Substantial gap up becomes substantial rally.

Relentless overnight trending into the open is often
vulnerable to reversing that trend through the morning. That, or else extending relentlessly through the morning if the open avoids a reversal. Which this morning did.

A pre-open potential Double Top at 2381.00 would have been rejected back under 2378.00. It was instead extended through the first hour to 2389.25. And fresh highs after 10:15 has helped to preserve the anchor qualities that were established by holding up through the open.

There’s one heck of a gap outstanding back down to “lower prior highs,” and tomorrow is not assured of extending higher. But an eventual recovery from almost any downturn would be very likely. Extending higher this afternoon isn’t assured, but a downturn isn’t any likelier from above 2381.00.

Still negative, but bouncing off of support.

The open gapped down as much as 4 points to touch the 2364.00 bias-down signal. Its reaction up to 2366.00 was retraced to 2363.50 while RSIs diverged positively or made higher lows. A higher reaction up to 2367.00 avoided triggering bias-down. An offsetting test of the 2372.25 bias-up signal is in-play.

We had already assumed trending would be difficult ahead of this evening’s speech. We assumed trending down will be difficult since the pre-open TGT earnings miss barely affected price action. A rally this morning doesn’t require trending, as price can simply gravitate toward the range’s upper-end.

The recovery’s potential would become suspect if a dip fails to hold 2364.50. It’s being attacked now. Back under 2363.50 would start to suggest a deeper dip underway.

Headlines steal the bullish show.

Dipping from the 2370.00 overnight highs greeted the open at the overnight low and then probed lower to 2361.00. Recovering it through the opening 15 minutes of volatility at 9:45 was the first suggestion that sellers were going to be marginalized.

Rallying to the 2366.00 bias-up signal stopped short of marginalizing sellers, thanks to one headline, and then another. Two negative knee-jerk reactions to trial balloons about Trump tax plans were each recovered, but not in time to trigger bias-up. Recovering 2366.00 by 10:30 has at least invalidated the 10:15 no-bias signal.

That has extended up to 2368.25, another new post-open high. It’s still short of the overnight 2370.00 new Globex trend extreme requiring intraday retest — not necessarily today, but probably. Next above it would be 2372.25-2373.75.

Already this morning, last week’s pattern has been broken. Each day’s intraday or opening drops was recovered entirely intraday. This morning’s challenge was shallower, but its recovery has reversed to new highs. None of last week’s dips got that done. Today’s might close lower, too — which would be bearish if at least 2370.00 were probed first.

Gap down bounces, but only so far.

Overnight selling had extended pre-open down to 2349.50. The open was greeted back at the 2352.25 bias-down target. And it held. Rallying from there extended up to the 2357.00 bias-down signal. And it held, too.

But for a blip-up on 10:00’s econ reports, the 2357.00 bias-down signal’s test reacted down to 2354.75.

Price action has since fluctuated choppily around 2354.00-2357.00, but this is a bias-down environment. Despite already testing the bias-down target, bouncing back up to the signal without recovering it does make the target’s retest likely. And delaying its retest makes it likely to break, too.

Sellers aren’t marginalized. Unless the bias environment exit is recovering above 2358.00, another downleg to last week’s “lower prior highs” remains possible.