Post-open Review

Gap down attracts reinforcements. A lot of them.

The overnight drop to 2821.00 had bounced 6 points to test 2827.00. Their range held to greet the open at Monday’s 2825.75 futures close. The open ranged there, probing Monday’s 2822.75 cash session close down to 2821.50. For awhile.

If the gap fill were going to hold a gap down, then it needed to be rejected. Sooner, rather than later. But the delay in returning back into Tuesday’s range only made the gap down likelier to extend. And that offered confidence in a relatively tight sell signal.

The hesitation did resolve down, and sharply. The session’s second 15-minute block formed a Running Correction — already a bearish pattern, but the worst time to expect otherwise. And it developed around 2818.00, which we already knew from Monday’s bounce off of the 2818.00-2820.00 upper-end was unlikely to hold.

The next lower objective in-play at 2808.00 was quickly met, and hesitation there is gradually resolving down now. It’s being probed, with room for noise under it down to 2802.00. Back above 2811.00 (being tested now) would start to signal a bounce targeting 2818.00-2820.00. But probably not a recovery, with the trend still requiring at least a third lower close.

Buyers ultimately hold the open.

The potential for gapping up above yesterday afternoon’s 2833.50 high had evaporated well before the open. Along with it went the potential for triggering a session-long rally. Extending higher is still possible, perhaps even throughout the session. But it’s not a requirement.

The 2830.50 bias-up signal ultimately triggered late. Its 2836.00 bias-up target had not been met, and quickly attracted price up to and through it. Unfinished business above was outstanding at yesterday morning’s 2840.75 bias-up signal, which broke lower during its bias-up environment. That was just probed up to 2842.00.

Recovering yesterday morning’s ~2844.00 high through the close wold break free from downside attractions, and confirm the Isolation setup is reinstated and targeting a retest of last week’s highs.

A lot of buying pressure has been expended already . More so, it has been expended aggressively by the steep and substantial 15-point rally off of the post-open 2826.75 low. And still yesterday morning’s high hasn’t been touched. Back under 2838.25 would start to signal this morning’s rally had failed, which remains a risk since the open already failed to exploit its opportunity to trigger a session-long rally.

Overnight sell-off disappears before the open.

Already recovering retracing before Monday’s open, the probe under Friday’s lows was isolated to the overnight. Just holding the opening 15 minutes above Friday afternoon’s 2826.00 lows would have sufficed. But holding above the morning’s 2828.00 low was optimal. Fulfilling the setup would target a retest of last week’s 2863.50 highs.

The 2840.75 bias-up signal triggered, too. Its likelihood had been indicated by recovering 2837.00 after the first post-open dip’s recovery ignored RSIs diverging negatively. Extending higher anyway usually means that sellers are marginalized for the window — if not also for the day.

2844.00 has been attacked. A pullback could develop, but its depth and durability would be doubtful, unless the noon hour were entered back under 2837.00.

Post-open bounce only delays the inevitable.

We knew that 2841.00-2843.00 was likely to be tested as compensation for the delay in testing 2851.00-2852.00. So, has probing another 10 points lower over-compensated, or is that the start of something much deeper?

Ranging around 2841.00-2843.00 expanded into the open. Resistance at 2843.75 repeatedly held, and repeatedly reacted down to lower and lower lows. The last reaction was the steepest and deepest, dropping 8 points to attack 2835.00 in a half-hour.

Bouncing into the open was essentially doomed to failure. Significant overnight moves — especially down — tend to require that the intraday crowd produce its own extreme. The post-open bounce up to 2841.50 only delayed the inevitable, and eventually collapsed down to 2832.00.

Now another bounce attacking 2840.00 is trying to recover. The impediment of requiring fresh post-open lows is done, but it took so long that counter-trend (up) sponsorship is less credible. Bounces are likelier to fail, and another fresh low is likelier than not.

Oh, Bermuda Triangle.

My pre-open comments noted that the overnight rally was still only noise within the range. The upper-end of that range being defined by this morning’s 2859.50 bias-up signal. Either reinforcements would arrive without delay, or else the bounce would be rejected.

So, neither. A quick dip down to 2856.00 reacted right back up to 2859.50 — and sat there. The grace period was invoked at 10:15, buying the bias-up signal some time. Meanwhile, an Ascending Triangle had formed, and it started breaking higher.

“Either, or” became “neither, nor.” Delayed trending has gained traction and triggered late bias-up. Its 2866.25 bias-up target is in-play.

Which is odd. No odder than yesterday’s detour up from the morning’s late bias-down. This range’s reactions to otherwise normal influences makes me think of the legendary Bermuda Triangle. Ironically, one week ago it was reported that Bermuda Triangle’s mystery may be due to “rogue waves.” Someone tell Prechter and Elliott.

So, the late break higher is valid. Being late, its bias-up target isn’t required, but the fresh post-10:30 high helps to confirm it anyway. Of course, yesterday’s post-10:30 low offered similar confirmation, just before reversing up sharply. But bias-up still gets a benefit of the doubt until a reversal signal triggers, currently under 2859.50.