Post-open Review

Pre-open fall over the edge extends post-open.

The overnight drop was on the verge of absorbing its reaction to CAT’s warning by trying to bounce back above 2653.00. But that was retraced back down to and through the earlier 2648.00 low when NVDA added its own warning. Recruiting NDX’s sympathy so near the open triggered a slide to 2637.50.

Post-open action extended down to 2626.50 while 3-minute RSI remained persistently oversold. Meanwhile, 1-minute RSI had begun to diverge positively, and soon 3-minute RSI left oversold territory. A bounce is now probing above 2634.50 with potential up to 2643.75-2645.00.

Holding last week’s repeated tests of “lower prior highs” at 2625.00 had formed the basis for a bounce. Bouncing into Friday’s high wasn’t arbitrary, having neutralized attractions above. There is no bullish reason to be revisiting 2625.00.

2625.00 support is thoroughly chipped away. This morning’s low has attacked 2625.00 to within 6 ticks. It may not be quite so close as to qualify as impatient buying, so beware that the bounce may be shallower than 2643.75-2645.00. Regardless, any bounce should be only a formality before actually touching 2625.00. And touching 2625.00 should offer little if any noticeable support before revealing an air pocket below.

Last higher objectives tested, probed.

Except for “unfinished business” left outstanding yesterday at the morning’s 2650.00 bias-up target, there was also potential up to 2656.00 and 2666.00. Both are tested, now probed.

The overnight rally had tested 2656.00 and reacted back down to the support of 2650.00 (which is also this morning’s bias-up target). Its recovery was already testing 2662.00 before the open. A brief dip recovered to now fill the gaps back up to last Friday’s ~2671.00 close.

RSIs already diverged negatively while probing 2666.00. Its knee-jerk reaction attacked 2662.00 and spiked back up to eventually test ~2671.00. RSIs continued diverging negatively. None of which is a sell signal, but does allow using a more aggressive sell signal. Back under 2667.00 and 2665.75 would be start signaling momentum is reversing down.

Exiting the bias environment above 2656.00, let alone above 2666.00, would be difficult to reverse down today. The topping pattern begun last Friday would become suspicious, and potential up to 2701.00 would be reinstated — albeit once again subject to confirmation from a second consecutive higher close on Monday.

Finally probing the overnight range’s upper-end.

The overnight sideways 2632.00-2645.00 range didn’t break pre-open, as a test of its upper-end reacted down into the open. Neither did the range break post-open, as the reaction down held a test of the range’s lower-end.

The range’s lower-end is also this morning’s 2632.00 bias-down signal. Twice testing it had already reacted up through 10:15 to touch the 2643.00 bias-up signal, invoking the grace period. A surge to 2647.50 by 10:30 triggered late bias-up, putting into play a test of its 2650.00 bias-up target.

Currently, a reaction down to 2641.00 should resume the rally back above 2644.00-2645.00. The reaction down has room to 2638.25 before suggesting a deeper dip underway. None of which speaks to the ultimate resolution of this morning’s price action, which hasn’t improved any upside potential.

Overnight rally extends, then collapses.

The 2627.50-2642.00 overnight range had broken higher to 2647.00 long enough before the open that its failure would likely be more than just noise. Extending higher post open attacked 2654.00, but barely held above the 2646.75 bias-up target at 10:15.

That officially renewed the bias-up signal. But the same downleg underway at 10:15 continued extending down, with room back down to the 2638.50 bias-up signal during the bias-up environment. It was tested at 10:30, but its reaction up to 2643.00 maintained the downside momentum.

Fresh pullback lows have now retraced 61.8% of the earlier overnight range down to 2632.50. A retracement up to the 2638.50 bias-up signal is required for having probed under it during a bias-up environment — unless the bias environment is exited under its 2625.25 bias-down signal.

Meanwhile, a little more room for noise down to 2629.50 could still be tested, and still be likely to retrace 2638.50. But any lower would essentially target 2625.25, and at least delay the 2638.50 retest.

Fresh lows are the beginning, or the end.

Wide, choppy ranging since before midnight had been contained largely within 2649.00-2656.00. The opening 15 minutes of volatility chopped around just below toward the overnight range’s upper-end. But the opening 15 minutes did not trend, so no downside momentum was indicated.

Breaking lower to 2641.25 held a test and retest of the 61.8% retracement of the gap between Thursday’s cash session close and Friday’s opening print. This is the last line of defense I had noted during this morning’s Market Tour. It’s also the only price action to have developed under Friday’s range — all of the selling since then is otherwise an Inside Day.

Reacting up just tested 2650.00, and could extend up to 2652.50-2654.50, while still being only temporary. Recovering back above 2656.00-2657.50 during the bias environment could end the pullback and keep 2710.00 in-play. Otherwise, back under 2645.00 (being tested now) could resume the decline. And closing under 2656.00, after having opened under it, would invalidate 2710.00 and probably also end the bear market rally.