Post-open Review

Pre-open dip stalls the rally.

Yesterday’s lower open was the rally’s tool to replenish its energy. Holding a test of its bias-down signal through 10:15 had indicated that sellers were weak-handed — impatient and ineffectual — and trapped. Their scrambling to cover shorts or to re-buy helped to fuel the intraday recovery to new highs.

Yellen’s congressional testimony helped, too. Anticipation for it to be repeated today is probably responsible to some degree for the overnight surge to 2340.00. Already having discounted that is probably also responsible to some degree for trending down before the open.

And like a swinging pendulum, retracing that discount allowed it to reappear as Yellen’s appearance got closer.

In fact, the pre-open dip down to 2331.25 bounced through the opening 15 minutes of volatility to test the 2334.25 overnight high. Releasing her embargoed opening comments had no more bullish impact on prices, and the 2336.50 bias-up signal wasn’t even touched.

This is a no-bias environment. Neither bias signal requires being tested, because neither was tested already post-open.

That isn’t preventing a probe above the 2336.50 bias-up signal anyway. The open hovered at or under yesterday’s 2335.50 cash session close, but didn’t extend down. A bounce just touched 2338.00. It’s origin makes it “no-bias trending” that is doomed to failure. That doesn’t prevent a sizable detour to and/or through the 2340.00 overnight high to 2343.00-2344.00.

Back under 2334.75 at this point would signal the 2336.50 bias-up signal’s test had held. It wouldn’t require trending down, since no offsetting test of the bias-down signal is required.

Bias-down signal held its test when it mattered.

Last night’s narrow ranging had tried recovering before the open but only touched the much earlier 2327.25 overnight high. Trending down from there into and out of the open probed fresh lows at 2320.50.

Ultimately, the 2321.50 bias-down signal held its test through 10:15, putting into play an offsetting test of the 2330.75 bias-up target. That’s somewhat in question amid fresh lows after 10:30 down to 2319.75. Fresh lows that are now reacting back up to 2323.00.

Regardless, it’s too late to trigger bias-down. It’s too late to invalidate it, and too early — the latter would be possible by exiting the bias environment under the 2320.50 pre-10:15 low, since there’s been no fresh high since 10:15.

The no-bias signal only inhibits no-bias trending under the bias-down signal. It can’t prevent probing it, especially amid Yellen’s headlines, and their real-time, knee-jerk impact on other asset classes. That’s “no-bias trending,” which requires at least retesting 2321.50 when the bias environment is lapsing or later. Retesting, if not also reversing back up. Today, that’s called unrequited selling.

Holding above the pre-10:15 low would make this morning’s 2330.75 upside objective become “unfinished business above.” Also outstanding above are yesterday’s 2329.00 high and 2331.50 bias-up target.

Overnight rally, pre-open recovery, post-open surge.

The open was greeted back at the 2318.00 overnight high, having recovered from a dip to 2313.50. Probing fresh highs through the bias timing window attacked the 2323.25 bias-up target to within 3 ticks. A pullback to 2319.50 has recovered to touch 2323.25.

I’m a little suspicious about extending any higher. Gapping up and trending up without hesitation is excessive optimism. The eventual reaction down was recovered more than entirely before consolidating, which is more optimism. And now RSIs diverged negatively upon touching the 2323.25 target.

Back under 2320.00 would target at least a test of the 2317.00 bias-up signal. It could be probed, but must define this window’s lower-end before being able to reverse the trend down.

Otherwise, extending higher despite the weaker elements would be its own bullish signal. Fresh highs would next target a test of 2327.00-2330.00.

Gap up, bias-up… but a little slow to follow-through.

The 2308.00 opening print was only 1 tick above yesterday’s high. Above it, at it, or even slightly under it, the relevant question is whether the opening 15 minutes of volatility trended through it. And it did, up to 2310.00.

So, after yesterday’s rally failed to gain traction, trending higher this morning required gapping up through the open. That is done. But gapping up through the open does not, itself, require trending higher.

2310.00 was the nearest inflection point, and it has only been touched. Its reaction attacked the 2307.00 bias-up signal to within 1 tick. Attacked it, but didn’t break under it, not by 10:15, triggering bias-up.

Back under 2307.00 through 10:30 would invalidate the bias-up. Without yet printing above the 2310.00 pre-10:15 high, exiting the bias environment at 11:30 under the 2306.75 pre-10:15 low would invalidate the bias-up.

Meanwhile, this is still a bias-up environment. Its 2311.75 bias-up target is in-play. Perhaps higher, too, since the open’s gap up negates yesterday’s rally not gaining traction — but doesn’t require extending higher.

PROGRAMMING NOTE: I WILL BE AWAY FROM THE SCREENS DURING TODAY’S FINAL HOUR. MARKET WRAP WILL BE HELD EARLIER.

Reacting down from the overnight 2296.25 high had retraced to 2291.50. The 2293.00 open never touched the 2292.75 bias-up signal. Firming back to the overnight high maintained the gap up at or above 2294.00, and bias-up triggered.

The 2297.75 bias-up target wasn’t exceeded by 10:15 to renew the bias-up signal, but it was still a bias-up environment. The target also wasn’t touched by 10:15 to satisfy its buying pressure. Quickly after 10:15 a surge extended to the target. And through it.

The two-week old 2299.50 “new Globex trend extreme” is now being probed up to new highs at 2301.25.

Prior highs are natural resistance, but only increase the vulnerability to backing-and-filling. The next higher objective is likely 2311.00, and reacting down would likely be only obligatory, especially so long as it 2297.00 holds any test of support.