Post-open Review

Retracement resumes post-open.

The overnight drop back down to 2422.50 had retraced yesterday’s final hour 55-point surge. Consolidating there formed an Ascending Triangle, vulnerable to a false break higher that then capitulates lower.

Except, breaking higher and/or capitulating lower would depend on already extending down before the opening 15 minutes of volatility had lapsed.

A post-open blip-up to attack 2446.00 was reacting down by 9:45, and has extended down to 2412.50. Both 1-minute and 3-minute RSIs have avoided oversold territory, suggesting that sellers are being well-rewarded compared to the amount of force they’re exerting. Bias-down has renewed, and although not required, the next likely target is 2406.00.

RSIs not getting oversold means no positive divergences. That didn’t prevent bouncing back up to 2429.00, and violating the current bounce limit. But bounces that originate while RSIs aren’t getting oversold do tend to fail. Back above 2431.00 would start to signal otherwise.

Post-open drop extends the decline, before being recovered.

Overnight action had resumed the decline, rejecting the overnight bounce. Friday’s 2409.25 low and the 2401.00 Globex open were probed down to 2390.75. Bouncing back above Friday’s late low to 2414.00 resolved down through the open.

Sharply. A blip-up to Friday’s 2409.25 low collapsed down to 2368.00. Which is already within 7 points of the decline’s next lower objective at 2345.00-2361.00.

Now a bounce has recovered it all — all of the post-open drop, up to a fresh post-open high at 2412.50. Back under 2400.00 would start to signal the bounce failing.

The bearish WedEX makes the bounce likely to fail, and the morning likely to trend back down. Holiday factors make today a wild card, and the WedEX less reliable. Just closing in negative territory would satisfy the bearish WedEX, but a more bearish production than that would still be appropriate.

But the wild card may have absorbed sellers already. Surging off of the lows is an example. Back above 2309.25 again could trigger a more substantial rally leg, but the morning remains vulnerable to another downdraft.

Pre-open warning undermines post-open surge.

Among all current influences on the market, one continues to bear repeating: Optimistic extremes are no more than the rubber band being stretched so it can snap back down.

A pre-open surge up to the 2490.00 bias-up signal seemed to make this case as it collapsed through the open down to 2471.50. But that was nothing.

Flat-to-lower ranging through the open eventually broke higher in reaction to a Fed speaker, surging from 2470.50 to 2508.00. Now THAT’S a rubber band stretch.

And it was short-lived, now reversed down to probe under overnight lows at 2460.50.

Bias-up had triggered — late, and after meeting its 2499.50 bias-up target. Reversing to its 2467.25 bias-down target invalidates any requirement to retrace the 2490.00 bias-up target. That said, 2490.00 would be the target of any bounce.

The bias environment is soon lapsing. A bounce limit is being violated. Potential for testing 2490.00 now depends upon delaying the decline’s resumption, which this afternoon’s WedEX intends to do.

Held support, but still testing it.

The potential for Isolation and Globex-Flip setups began fading when the overnight surge to 2518.00 proved excessive. The open was greeted back down at 2494.25, and it extended down another 10 points to 2484.25.

Then a bounce, back up to 2512.00. The 2492.25 bias-down signal was recovered to trigger no-bias, putting into play an offsetting test of the 2524.00 bias-up signal.

But not necessarily in a direct path up. A pullback just retested the 2494.25 open. Being a no-bias environment, there’s room to test the 2492.25 bias-down signal as support. Back above 2507.50 would start to signal the upside objective’s test is underway.

Having said all that, having failed to form a couple of other recovery setups, we can’t be surprised if the no-bias signal environment fails. Probing its bias-down SIGNAL is too late to invalidate the upside objective. Rejecting the no-bias signal now requires exiting this window back under its 2578.25 bias-down TARGET.

Post-open surge is productive, for now.

The overnight rally ultimately extended to pierce yesterday’s 2562.50 late surge peak. But the last 90 minutes fell suddenly, steeply, and substantially to greet the open at 2547.00-2549.00. The pullback was deep, and it had originated from above yesterday’s late high. This was a new rubber band stretch, and a big potential reward (to retrace the pullback).

In fact, the pullback was retraced and then extended. The 2564.50 bias-up target was exceeded in time to renew the bias-up signal, and its 2572.00 renewed bias-up target was probed.

A reversal attempt under 2569.00 just failed, resolving in a test of 2574.00. Extending the open’s surge could get overly optimistic ahead of this afternoon’s FOMC events, or even in reaction. But this is not from nearly as strong a base as if the open itself had already recovered yesterday’s
late high — which should make the FOMC events all the more fun.