Post-open Review

Bias-up triggers, but not in a supportive context.

Post-open action has trended up. Gradually, if not painstakingly, but up. Bias-up triggered. And it has extended several points already to 2115.50. So, why is this bearish?

Context.

Yesterday’s rally didn’t gain traction for its effort. So, resuming the rally this morning required gapping up above yesterday’s 2112.25 high. But today’s entire first half-hour fluctuated at or under 2112.25 before extending higher.

The late start doesn’t preclude trying to extend the rally this morning. It just makes it vulnerable to reversal. Without recovery.

This doesn’t detract from the very valid bias-up signal that triggered above 2111.50. A fresh post-10:15 high just printed, making the 2117.00 bias-up target likely to be met sooner rather than later. And its test could visit 2119.00, too.

Counter-intuitively, a bullish template would find an excuse to dip. Leaving “unfinished business above” is a safety tether that can guide a later recovery by strong-handed sponsorship. Otherwise, already satisfying upside attractions would more likely start a topping process.

Payrolls and Brexit sellers now fueling the rally.

There were no obstacles to rallying this morning, only potential obstacles of the open reversing back under support or else the bias timing window not triggering bias-up. Now it’s too late for those potential obstacles to form.

Past obstacles were retraced already before the open. Friday’s reaction to the pre-open Employment Situation report and last Tuesday’s reaction to improved Brexit support have resolving in probing fresh highs.

2106.00 was touched just minutes before Friday morning’s plunge. That has been probed this morning up to 2108.25. The 2103.00 bias-up signal triggered, putting into play a test of its 2110.75 bias-up target.

A negative knee-jerk reaction down is possible on Yellen’s noon hour comments — or in anxiousness ahead of them. The 2110.75 bias-up target would become “unfinished business above” if not met this morning.

Nothing but selling pressure since the news. And targets met.

A blip-up to 2106.00 had preceded the Employment Situation report. Its reaction down hesitated at the 2095.50 bias-down signal to form a Descending Triangle. Its break down to 2091.25 reacted up to 2098.00 through the open.

And then it was back to business.

The 2088.00 bias-down target was exceeded through 10:15 to renew the bias-down signal. The renewed bias-down target is 2082.50.  And it was just met to within 1 tick.

Business done?

Possibly. After correcting the first reaction up by 61.8%, another bounce is now retesting 2088.00 as resistance. A signal that already triggered below it has yet to be confirmed. Extending higher would have room to test the 2095.50 bias-down signal during the bias-down environment.

That has been this week’s pattern — extending overnight drops post-open, and then recovering intraday. Today is a bit extreme, and the post-open series of lower lows and lower highs (i.e. downtrend) remains intact.

The question to be resolved is whether the Friday Factors of impending two-day illiquidity have exacerbated the initial selling beyond unsustainable levels, or if it will have an even greater effect as the weekend approaches.

Another pre-open dip recovers post-open lower lows.

Yesterday’s open was greeted by an overnight slide that then extended deeper to probe under Tuesday’s lows. That test held, recovering through the balance of the morning.

Today’s open was greeted somewhat similarly. The slide was only back down to the overnight low, which wasn’t very deep. But there was post-open follow-through, as a 7-point plunge to 2086.75.

The 2090.75 bias-down signal didn’t trigger, nor was it rejected, instead still being overlapped for yet another noN-bias environment. No particular bias result is required or in-play.

A buy signal has pushed price back up to its 2093.50 post-open high. Pushing through would be likely to probe above yesterday’s highs. Otherwise, any fresh low could soon probe under yesterday’s low, too.

Congested open capitulates to sellers.

The 2101.00 bias-up signal was touched  twice before the open. The open’s reaction down pierced its 2098.25 pullback limit by 3 ticks. Recovering to retest 2101.00 never attracted new sponsorship to trigger bias-up.

Actually…

…still overlapping the signal at 10:15 AND at 10:30 triggered noN-bias. Not a bias-up putting into play its target. Not a no-bias putting into play an offsetting test of the bias-down signal. But noN-bias that has no predictive value.

That said…

…improving sentiment toward Brexit triggered a knee-jerk reaction down that tested the 2096.25 bias-down signal. Testing and retesting it has only overlapped it, while violating its bounce limit.

Back above 2098.25 would start to signal momentum reversing up. The plunge’s sponsorship is by definition weak-handed, its catalyst having been a headline. The plunge’s origin was congestion, a setup that is typically retraced, regardless of how that then resolves.

Meanwhile, another dip under 2096.25 would be credible for extending down, anyway. Its potential would be the 2091.25 bias-down target.