Post-open Review

Rally’s extension retraced, and reversed.

Gapping up to 2252.00 wasn’t immediately attractive. Blipping-down before probing higher still peaked 5 ticks short of the 2255.25 pre-open high. And even that was reversed down to a fresh low. But the fresh low stopped 1 tick short of even touching 2248.00.

Its break would have marginalized buyers — instead, its attack dumped all available sellers. So, momentum reversed up. More than 11 points.

That probed “higher prior lows” above 2255.00 for the first time intraday. And 2257.50 was being tested. Both held, and both were rejected. A simple correction would target 2251.00, and it was quickly tested.

2251.00 was also quickly broken, and soon this morning’s 2254.25 bias-up target was being tested down to 2244.00. It was too late for probing under 2248.00 to marginalize buyers. And too early. It’s still being tested now, as the bias environment comes within view of lapsing.

The open gapped up, and extending higher made it a productive gap up. Exiting the bias environment under the open’s productive gap up is not bullish. Not unless another rally leg exits the noon hour back above the open.

Oversold RSIs at the low still require a retest, but I would start giving that a benefit of the doubt back above 2248.00. Otherwise, nothing prevents filling the gap back down to Friday’s 2236.50 close, or even resuming the decline next targeting 2215.00.

Steep opening drop to fresh lows.

Two key points from yesterday’s close and today’s open had a similar message: Last night’s rally was the wrong way to reverse the trend, like yesterday afternoon’s rally only to unchanged was the wrong way to reverse momentum. Neither one was reliable for extending higher Friday morning.

That faux bullishness didn’t prevent last night’s rally. But the addition of last night’s rally only steepened the consequences of not actually extending higher post-open.

In fact, the overnight pivotal uptrending support described during the Market Tour was broken immediately after the open probed only 1 point above the 2248.00 bias-up signal. And it was broken hard. The 2241.25 bias-down signal was touched to within 1 tick during the opening 15 minutes of volatility.

The first hour extended down further to 2236.75, triggering bias-down, and putting into play the 2235.25 bias-down target. The next lower target is 2230.00-2232.00, despite an air pocket under ~2241.00 not having materialized.

Back above 2240.00 (being tested now) could launch a corrective bounce, essentially targeting 2243.00. But no more than a corrective bounce is likely today.

Isolation open has yet to perform.

The open has yet to probe negative territory under yesterday’s 2245.25 close. It could have been probed down to yesterday’s 2243.50 low, and still formed an isolation setup. But until the setup is productive — actually launching a rally — it is vulnerable to failure.

Once it fails, it has failed. Until it fails, it has not. And that’s where the isolation setup finds itself now. Not failed, but may yet.

The opening 15 minutes of volatility touched 2250.00 without exceeding it, which was the preliminary indication making the 2248.75 bias-up signal unlikely to trigger at 10:15. And bias-up didn’t trigger at 10:15, putting into play an offsetting test of the 2242.00 bias-down signal.

That’s under the overnight low. Any lower would be vulnerable to an air pocket that stretches through the entire 2230 handle. The open’s temporary isolation could have formed an anchor to help absorb fresh lows. Rejecting 2242.00‘s test quickly and decisively could form the last bottom of the year.

Not recovering fresh lows, air pocket or not, would next target 2215.00. Probably lower, and probably this year.

Pre-open rally bites off more than post-open buyers can chew.

We already knew that not rallying quickly post-open would risk not triggering  the 2266.50 bias-up signal, putting into play an offsetting test of the 2259.00 bias-down signal. And that would have mutli-session bearish implications for attracting the balance of the morning down further.

But now that’s essentially the bullish scenario.

Weak-handed buying pressure at the open was unable to probe above yesterday afternoon’s ~2266.75 highs despite piercing them pre-open. Back under 2265.00 signaled momentum reversing down. It reversed down hard. Offsetting test of the 2259.00 bias-down signal? It was triggered. And its 2253.25 bias-down target has already been attacked to within 5 ticks.

So, the bearish scenario would have expended too little buying pressure to trigger bias-up. Now the bullish scenario is having expended too much selling pressure to be maintained.

At least, that would be the bullish scenario — IF the bias-down target is tested and held to within 3 ticks. Preferably this morning, allowably during the noon hour, so long as this afternoon then rallies.

Oversold RSIs at the low require its retest. Back above 2257.75 first would likely bounce to 2262.50. Leaving unfinished business below would likely trend down into the weekend.

Uptrend is anchored.

Gapping up to 2262.50 immediately surged. The 2266.00 bias-up target was touched, which also served as the high of a Running Correction. The consolidation resolved up as aggressively as it was entered, quickly testing 2269.25. The hour since then has plateaued there.

This is a renewed bias-up environment, having exceeded the bias-up target through 10:15. Its renewed bias-up target is essentially a retest of the 2273.00 high, presumably to 2275.50 or 2278.25.

Meanwhile, the uptrend faces a challenge from that sequence around the Running Correction — surging into and out of it, then plateauing. A pullback to the consolidation’s lower quadrant would be common before resuming the rally. That’s either 2264.75 or 2263.50. Any deeper would start to be bearish, but the anchored gap up minimizes that chance.

The plateau can also resolve up, ignoring a corrective dip. Yes, its eventual reversal down would be more substantial, if not also durable. But it resolving up first would essentially marginalize sellers until new highs are probed. So, if short or shorting, even if only for a temporary corrective dip, beware a break above 2270.00.