Post-open Review

Big post-open rally.

The intraday range of yesterday’s probe of fresh lows was relatively narrow. That didn’t necessarily contradict my ongoing assumption that we’ve entered a period of heightened volatility. An inside day would have been suspicious, but at least Thursday was being productive with a new low.

Well, volatility has returned — with a vengeance. Gapping up to the 2043.00 bias-up signal soon extended to its 2048.50 bias-up target, and not much later has also touched 2054.00.

This is a renewed bias-up environment. Its 2055.00-2056.00 renewed bias-up target doesn’t require being met.

RSIs diverged negatively at the high, and now a reaction down is testing 2050.50 down to 2049.00. Any lower could shift the balance of the morning to defense, with room down to its 2043.00 bias-up signal. Back above 2052.25 would more likely extend to 2055.00-2056.00.

Exiting the bias environment under this morning’s 2043.00 bias-up signal would invert this afternoon’s bullish WedEX influence to bearish. Otherwise, even the most bullish WedEX would be fulfilled by only ranging flat-to-higher into the weekend (and delaying an aggressive rally until Monday morning).

Near-term target immediately met.

Fresh lows were likely to test 2025.00-2027.00, and all interim bounces were likely to fail. Opening at 2033.00-2035.00 reacted up to test 2039.50 resistance, then reversed down. Hard.

The first half hour ended by touching 2025.00. RSIs diverged positively while eking out a couple of lower lows down to 2023.75. Its reaction up tested 2031.00 before dipping back down toward 2025.00. Bouncing again would target 2033.00 and potentially 2035.00.

There’s no requirement to extend down any deeper. But extending down is likely without the the noon hour’s entry at least trying to retest the open’s highs. The next substantial objective of extending down would be in the 2018.00 area.

Shallow post-open dip, rushed recovery, target met.

If not gapping up, then this morning’s only bullish scenario would first reject a probe under yesterday’s low. Then the 2039.50 bias-down signal must avoid triggering, putting into plan  an offsetting test of the 2050.50 bias-up signal.

Yesterday’s low was pierced by an optimistic 2-tick margin. A buy signal triggered above 2041.50. And the bias-up signal was tested up to 2052.00.

No-bias triggered at 10:15. It was almost invalidated by probing above it. But probing above it was retraced through 10:30. This is a no-bias environment, so its upper-end should be defined by its bias-up signal if tested.

A reaction down was likely to test 2046.00 (now being probed down to 2044.50). Overbought RSIs at the 2052.00 high require its retest, probably by a couple of ticks. But, what then?

Even this morning’s most bullish scenario was likely to resolve down. Probing under yesterday’s lows was no deeper than necessary to qualify. That’s optimism, like the steep recovery resembling impatient buying, which can be bearish from a contrarian perspective. And the bounce’s target has been met and held.

Having dipped to 2044.50, back above 2047.50 would signal that a retest of the overbought RSIs is underway. Rallying any higher would be difficult with the afternoon’s FOMC Minutes release looming. Regardless, notice that substantial intraday trending range is now coming earlier in the day — we’re obviously back in a very opportunistic environment.

Bias-down morning points to trending afternoon.

Traction gained by yesterday afternoon’s rally goes unfulfilled. It wasn’t even inverted, as the opening gap bounced off of the 2059.25 bias-down signal instead of extending immediately through it.

Gapping down did eventually extend, quickly touching its 2053.50 bias-down target. It has been tested and retested, despite already having fulfilled it, and despite chipping away at its support. This is still a bias-down environment, but no lower low is required.

2050.50 would be a lower lower where sellers could become so stretched that price reverses back up aggressively. Its test isn’t required, but it becomes likelier as the bias environment approaches without yet threatening to recover the 2059.25 bias-down signal — it’s being attacked now to within 2 ticks.

Backing-and-filling this morning is not at all inappropriate before resuming the rally this afternoon. Yesterday afternoon’s unrewarded traction won’t be compensated for its delay — but it should at least prevent the backing-and-filling from extending down beyond this morning’s bias environment. Otherwise, the third consecutive weekly recovery attempt will have failed.

No immediate drop means rally likely.

As we discussed during this weekend’s Saturday Review, selling pressure must be compartmentalized to prevent it gaining traction. And not immediately extending down this morning would default to be bullish.

Last night’s spike down to 2035.00 was never repeated post-open (not even overnight). And the flat 2043.50 open rallied immediately.

Fulfilling the setup has led to triggering the 2050.50 bias-up signal. A test of the 2056.00 bias-up target is in-play.

Fresh highs are testing 2054.00, which retraces 61.8% of Friday’s intraday range. There is room for noise above the bias-up target to 2058.50.

Sellers aren’t likely to regain control before this afternoon, if at all. Any downdraft will be considered temporary if the bias-up target hasn’t yet been met. Meanwhile, extending even higher this afternoon would signal the multi-week rally was being retraced.