Post-open Review

Two optimists walk into a bar. The first one says, “Hey, where’d everybody go?”

Another gap up? Another reversal back under the open? No learning curve is this slow. Expiration is coming, and the position-jockeying is ongoing.

This morning’s extension of the overnight rally didn’t reject its test of 1938.00. But 1938.00 wasn’t clearly recovered, and was  still being overlapped at 9:45. Its recovery offered a lot of reward — Christmas in January. But its reaction down is testing 1918.00.

20 points of the high is a lot of selling. Even more so — that comes after testing what would have been the renewed bias-up target at 1938.75, back under the 1933.50 bias-up target, and not yet rejecting the 1927.25 bias-up signal at 10:15.

It’s rare enough to reject tests of both bias parameters through 10:15. Rejecting them AND their renewed bias-up target is unlikely. In fact, the bias-up signal wasn’t rejected. It was being overlapped at both 10:15 and 10:30 to trigger noN-bias.

A simple correction still has room down to 1912.00 or 1907.00 before suggesting the decline has resumed. This post-open dip can resume the decline since the open didn’t gain traction. Entering or exiting the noon hour above a prior high would suggest the post-open dip was just a correction, after all.

Opening strength evaporates entirely.

The pre-open recovery to the 1928.50 overnight high was pierced up to 1929.00 through the open. That’s 15 points above Friday’s cash session close.

And it’s all optimism.

Any higher would have gotten a benefit of the doubt for renewing the bias-up. Instead, back under 1924.25 signaled momentum reversing down, falling to a fresh low at 1912.25.

Only momentarily overlapping negative territory has kept the door open to another bounce. In fact, an 11-point bounce just touched 1923.25. The eternal springing of hope is astonishing.

Having said that, this is a no-bias environment that rejected tests of both bias-up parameters, putting into play offsetting tests of both bias-down parameters at 1907.00 and 1899.75.

Payrolls reaction retraced, but not yet reversed.

The reaction up on Payrolls had attacked 1965.00 before reversing back down to 1944.00. The open’s “last gasp” bounce up to 1953.00 was retraced down to 1935.50 until the 10:15 bias timing window.

Rejecting tests of both the 1942.50 and 1948.00 bias-up parameters by 10:15 has put into play offsetting tests of both the 1927.25 and 1921.00 bias-down parameters.

Confidence could be greater. But only because optimism keeps popping-up. Literally.

• Absorbing the open’s gasp up to 1953.00 was only retraced to its 1944.00 pre-open low, not reversed under it.
• Fresh lows were recovered to test the 1942.50 bias-up signal as resistance at 10:30, almost recovering it in time to invalidate its earlier rejection.
• The pre-10:15 1935.50 still isn’t probed. Exiting the bias environment above prior highs can invalidate the bias signal.

The likelier scenario remains down. Continued optimism can only delay the destiny, at the cost of exacerbating its eventual effects. In that delay is potential for bouncing into the noon hour. Otherwise, fresh post-open lows — especially if probed aggressively — could extend down deeply into the afternoon.

Another post-open bounce that isn’t likely durable.

The pre-open bounce’s post-open reaction down held 1945.00 to maintain its upside momentum targeting 1954.00-1956.50. The target’s pullback limit held, and the rally extended to 1961.00.

Its reaction down to almost 1951.00 lasted almost long enough to seal a top. But it was recovered by enough by 10:15 to marginalize sellers before extending the bounce to 1965.25-1966.50.

The target’s lower-end was just touched.

Back under 1959.00 would start to signal momentum reversing down. Reversing momentum back down could be limited to attacking the 1948.50 open. Any lower would start to signal fresh session lows and lower are in-play.

Meanwhile, the gap down’s post-open bounce has prevented conditioning market participants to be pessimistic. Not closing substantially higher will condition the market to sell gaps down — like the one being suggested for tomorrow by the active template.

Late surge trying to extend the open’s firming.

The open immediately surged through 1978.50, avoiding a test of 1973.75 first. Testing 1973.75 first and then recovering 1978.50 would have accomplished two objectives of a bottom. Post-open selling reflects pessimism, and recovering it casts that pessimism as weak-handed, which is bullish from a contrarian perspective.

Only recovering 1978.50 isn’t necessarily overly-optimistic. But it does keep the burden of proof on buyers to maintain the open’s pace. Otherwise, turnabout is fair-play — post-open optimism can be proved weak-handed, too.

Room for noise has been probed up to 1991.75, but never exceeded through a relevant timing window like 10:15 or 10:30. Now RSIs are deteriorating into the higher high. A reversal signal under 1987.75 is being tested.

Probing any deeper than its first 3 minutes’ low would target 1977.25. Any lower than that would target new session lows. Exiting the bias environment above 1991.75 would a big step toward extending the bounce through late afternoon.