Post-open Review

Yellen’s pre-open release kept something on the table.

It wasn’t just scraps, but it’s now gone, nonetheless.

The pre-open test of 1857.25 support was retested post-open down to the 1855.50 bias-up signal. Its support held, and the 1861.25 bias-up target was exceeded through 10:15 to renew the bias-up signal.

Friday’s “higher prior lows” around 1868.00 had not been tested post-open. But now overnight highs have been exceeded up to 1877.75.

Several fibonacci extensions clustered there to trigger my warning in the chaRTroom that a pullback had become likely. It had no particular expectations, whether shallow or deep, but it has proved to be the latter. Its 16-point reaction is testing 1859.40.

Meanwhile, the pre-open cooler from Yellen that was bullish from a contrarian perspective has been fulfilled. Even the gaps back up to Friday’s 1873.25 and 1875.50 closes have been filled.

Extending higher to 1881.00 and 1888.00 is not assured, but at least a bounce to 1868.00 is somewhat likely. Exiting the bias environment at 11:30 back under its 1861.25 bias-up target would undermine the upside momentum. Under the 1855.50 bias-up signal could reverse it down.

In case you haven’t yet grabbed it off the blog, here’s the link to this morning’s pre-market Tour.

Pre-open slide is retraced post-open.

I described during the pre-market Tour how neutralizing an attraction can allow price to react in the opposite direction. It had happened overnight when overbought RSIs at yesterday’s 1855.00 high was retested overnight, sending price back down.

One condition usually isn’t sufficient. So, retesting overbought RSIs extended to also test the resistance of this morning’s 1856.50 bias-up target.

Then price reacted down.

And down. This morning’s open was greeted with already having retraced yesterday’s weak-handed rally, back to its origin. That attraction below had been neutralized. The open’s blip-down also touched the 1825.75 support that had attracted yesterday’s decline.

Then price reacted up.

And up. While we’re not expecting yesterday’s rally to resume — it originated so late that its sponsorship must have been weak-handed — there was still room to rally back to the range’s highs.

In fact, the overnight high was touched. It reacted down soon enough to avoid triggering bias-up (the grace period was invoked, and late no bias was triggered). Now the 1840.00 bias-down signal is being tested as support.

Exiting the bias environment at 11:30 back under the 1834.50 bias-down target would start to suggest the decline is resuming — whether or not today.

Sellers gain reinforcements to push price lower.

Gapping down to the 1848.00-1849.00 area firmed only momentarily before diving to fresh lows at 1841.00. Another bounce probed the 1848.00-1849.00 area before resolving down again.

Eventually, fresh lows attacked 1833.00.

Now a bounce to 1843.00-1844.00 is trying to extend its recovery. It wants to extend. Recovering here could exit the bias environment with the objective of testing Friday’s range.

That reward would have been much more reliable if triggered a half-hour ago. Now a recovery is unlikely before extending down to 1825.75. So, bouncing any higher here would still encounter the 1848.00-1849.00 area’s resistance before further downside can be dismissed.

So did buyers. Sellers are exploiting theirs.

Yesterday’s session was replete with pessimism. Multiple rally attempts to trend down were recovered back into the range. So, that pessimism is ineffectual, not having gained traction for the effort.

But the pessimism was never rejected. Dips, once absorbed, never reversed back above a prior high. That was the caveat to today’s bullish potential.

It was also the caveat to this morning’s pre-open surge. At least the payroll reaction’s spike down was in-line with yesterday’s dips that had recovered. But already recovering it before the open also tracked the pattern of failed bounces.

So, testing 1908.00-1910.00 was reversed through the open back down to the 1895.75 pre-open low. And then lower to 1891.00. Bias-down triggered, and although its target was met already, that’s now extending to 1885.00.

Unless 1890.00 is recovered coming out of the bias environment, the drop’s next objective is 1873.75, and potentially a retest of Wednesday’s low down to 1962.75.

Another opening dip is recovered.

This morning’s 1891.50 bias-down target had been probed pre-open by 5 ticks. Bouncing into and out of the open touched the 1908.00 bias-up signal and reversed down sharply 14 points. It took a while longer and a couple of econ reports, but the 10:15 bias timing window had surged back above the 1908.00 bias-up signal.

In fact, the 1913.00 bias-up target was being probed at 10:15, by just enough to renew the bias-up signal. That has extended to touch 1917.75.

Traction gained by yesterday afternoon’s buyers was not rejected, so it should still be rewarded by probing higher through the morning. I won’t otherwise consider a sell signal that is above the 1908.00 bias-up signal.