Post-open Review

Gap up extends through relevant window.

Having failed to gain traction yesterday, resuming the rally this morning required gapping up. Bottoming was already sufficient to have ended the 2-week old pullback and backing-and-filling was sufficient to have formed a base. So, the rally was likely to resume today, making the open likely to gap up.

Which it did, decisively, 5-points above yesterday’s 2900.00 high. Halfway through the opening 15 minutes of volatility, not yet rejecting the gap up, post-open action surged. It easily exceeded the 2905.75 bias-up target to renew the bias-up signal.

The renewed bias-up target is 2915.50 which was ultimately attacked up to 2912.00. China trade news has triggered a knee-jerk reaction down to 2906.00 that has extended lower to test 2902.00. Back above 2905.50 would signal that the rally had resumed.

A slightly deeper pullback is possible while still being likely to recover. Preferably and usually, at this “obvious” stage of the recovery, optimism will prevent touching yesterday’s 2900.00 high. Any lower would undermine the recovery — probably not at risk of reversing momentum down, but inserting another round of backing-and-fillnig.

Bearish setup avoided, but bearish behavior ensues.

Overnight probed above yesterday’s 2893.00 high. So, exiting the open at 9:45 under the earlier 2888.00 overnight low would have formed a bearish setup. Price would have been expected to trend down through this morning, if not also through tomorrow morning.

2888.00 wasn’t broken through 9:45. Not for lack of trying. So, sellers tried to form the setup, and failed. The consequence should be as bullish as it would have been bearish.

It hasn’t been bullish, not at all. And it might not be. Instead, the 2884.50 bias-down signal triggered, albeit late. Already meeting its 2879.00 bias-down target to within 3 ticks means it won’t become “unfinished business” if left outstanding.

This is still a bias-down environment. Back above 2884.50 would be bias-down rallying, and require being retraced. Perhaps NDX underperformance needs to be absorbed and stabilized, first. Recovering 2884.50 after the bias window starts lapsing would be free to rally — and could still be as bullish as the earlier setup would have been bearish.

Gap down holds support, recovers resistance.

The open was greeted at this morning’s 2871.00 bias-down target. The first several minutes collapsed 4 points to attack 2867.00, which was retraced entirely several minutes later.

Recovering continued up to and through this morning’s 2877.00 bias-down signal. Rejecting tests of both bias-down parameters through 10:15 has now put into play offsetting tests of both bias-up parameters — 2884.50 and 2890.75. It’s the third consecutive opening rejection of both bias parameters, which is very very.

Rejecting both bias parameters, again, reflects the widely disparate opinions and their sponsorship’s willingness to defend them. Another detour wouldn’t be surprising. Not even this morning when probing back under the 2877.00 bias-down signal during the no-bias window would be “no-bias trending” that requires being retraced.

A deeper pullback would target 2871.7-2873.00. Back above 2881.00 would signal the rally is resuming into positive territory. Calling a short-squeeze may be premature, but the pattern would be vulnerable to it.

Both bias parameters rejected, again.

No new sponsorship greeted the relentless overnight uptrend. That already had made reversing down likely. Then tests of both bias-up parameters — the 2886.75 bias-up target and then its 2881.50 bias-up signal — were rejected through 10:15. Like Friday morning’s rejection of both bias-down parameters, offsetting tests of both bias-down parameters is in-play at 2871.00 and 2864.75.

None of which is necessarily reliable for timing — one of Friday’s upside objectives wasn’t met until last night’s 2886.75 high, and retested this morning by a blip-up to 2888.25. So far, the reaction down has only touched 2878.00.

But the signal’s directional context suggests resolving down. That comports with the Market Tour discussion, which described how the session’s lower volume would make trending beyond the range more difficult than just bouncing around within it.

So, a retest of 2888.25 can’t be dismissed, more so back above 2883.50 (being touched now). Back under 2879.50 would signal the reaction down had resumed.

Both bias parameters rejected.

The pre-open Employment Situation report was greeted at 2875.00. Its reaction spiked down to 2869.00, which extended down to 2866.00 through the open. A retest down to 2865.00 was recovered, back above both the 2868.75 bias-down target and the 2875.25 bias-down signal.

Maintaining recoveries from testing both through 10:15 has put into play offsetting tests of both bias-up parameters — 2886.75 and 2892.25. Unfinished business at 2895.50 would likely be a part of that mix.

Nothing prevents a straight path up. Also, nothing requires it, even if we knew with 100% certainty the upside will be fulfilled today. But exiting the bias environment rallying through 2884.50-2886.75 would start to suggest a short-squeeze into the weekend.

Meanwhile, exiting the bias environment in negative territory under 2880.25 would be less reliable for rallying this afternoon. And back under 2875.00 would re-open the door to 2857.00.