Post-open Review

“Dry Cleaners morning” signal avoided, by a narrowing range anyway.

Generally, when the same relevant price is overlapped by any 3 of the first hour’s five 15-minute checkpoints, then the bias environment tends not to trend. More so, its fluctuations are directionless, and frustrating.

This morning’s first hour established two relevant levels at 2676.00 and 2681.00. Each was overlapped twice at two separate 15-minute checkpoints. The 10:30 bar had bounced from testing 2676.00 to probe only slightly above 2681.00. Although a Dry Cleaners morning isn’t actually signaled, trending attempts beyond the open’s range will be difficult to extend this morning.

Trending would be difficult anyway, since all but one of the first hour’s swings was contained within the open’s 2676.00-2684.50 surge. And neither bias signal was touched after the open — the 2674.00 bias-down signal was touched 2 minutes before the open — so no offsetting test of the other bias signal is required.

But breaking higher, which is now being attempted above 2683.50, could be attracted to filling the gap back up to Friday’s 2690.00 close, which would likely hold. Probing it has room anyway up to the 2699.00 bias-up signal, which would likely hold, but also likely reverse down sharply.

Negative territory isn’t being rejected.

Pre-open lows had extended to within 3 ticks of this morning’s 2652.00 bias-down target. Bouncing to within 3 ticks of the 2666.00 bias-down signal was retraced almost entirely before the open. Another bounce spiked up to almost 2664.00 but also collapsed to fresh lows at 2647.00.

Hope still springs eternal. But the springs are briefer, with more immediate consequences.

Still, the 2652.00 bias-down target held through 10:15 to avoid renewing the bias-down signal. It was still being overlapped, and it was probed, but fresh post-open highs just tested 2666.00. Being the bias-down signal, it’s test should define the bias-down environment’s upper-end. In fact, its test has reacted down to 2659.25.

Reacting down any lower would start to signal the bounce is done. It’s being probed now. Resuming the decline should not be camouflaged — at least, the slope should become obvious upon breaking under 2555.00 lower prior highs. Otherwise, fresh post-open highs should be limited to filling the gap back up to yesterday’s ~2777.00 close.

Fresh lows get squeezed as their catalyst evaporates.

Yesterday afternoon’s pessimism was proved to have overly-discounted this morning’s Fed chair testimony. Yesterday afternoon’s pessimism, the overnight pessimism, and then the post-open pessimism.

That last bit of pessimism was a pre-open recovery that let the open touch a 2720.00 buy signal instead of triggering it. Its reaction down attacked the overnight low and this morning’s 2698.25 bias-down target. The 2707.50 bias-down signal avoided triggering thanks to a grace period. The offsetting test of its 2726.00 bias-up signal was quickly fulfilled, probing it by 5 points.

That’s also a test of what had been yesterday’s next lower objective at 2729.00. Its resistance has reacted down to within 3 ticks of 2707.50. Nothing prevents the reaction from extending down to fresh lows. Nothing except the 2707.50 bias-down signal whose test should now define the window’s lower-end. Until the window starts lapsing.

Back above 2718.25 would start to signal the reaction down may have been absorbed. Meanwhile, the next lower objective is fresh lows at 2693.50, and potentially resuming the decline. THE decline.

Post-open extends the overnight recovery.

The inverted Head & Shoulders pattern that had developed overnight ultimately held its 2746.00 shoulder. The open was greeted by probing 2 points above the 2754.25 neckline, and the opening bar added 2 more points.

The opening 15 minutes of volatility trended back down, which is not optimal for an Isolation setup. It still gets a benefit of the doubt, so long as negative territory is still avoided this morning. And continuing to fulfill the setup would continue to make this afternoon likely to rally.

I’m giving the Isolation setup a benefit of the doubt, despite its open not being optimal, because the open’s dip maintained its recovery above yesterday’s lows, especially its optimal 2749.75 support level. The next 15 minutes extended to a fresh high at 2762.00, and its reaction down held the 2755.75 bias-up signal in time to trigger.

None of which prevents a deeper post-open dip down to 2744.50-2746.00. RSIs aren’t improving, and multiple attempts to resume the recovery are each being met with multi-point reactions down. A detour is possible, even if we knew with complete certainty the bias-up and Isolation setups will be fulfilled. Otherwise, reacting down too deeply would invalidate a recovery, and next target 2729.00 below.

Fresh highs falling short.

The new Fed chair’s remarks were released at 8:30 and the market dipped several points to test 2776.00. But it held the range. Bouncing into and out of the open encountered another dip that only attacked 2776.00. It also held the range.

The second dip’s potential to break lower ran out of time as Powell took his seat. The market reacted favorably and rallied to a fresh high. The 2781.00 bias-up signal triggered along the way and came within 5 ticks of its 2791.00 target.

The Isolation setup required only a fresh high.

And that was all they got, before being overcome by being fully discounted. No longer was the testimony being welcomed, or being absorbed. It had been influential, first in anticipation and then in fact. Its sponsorship was no longer strong-handed enough to defend it, and price reversed down sharply.

This morning’s 2766.00 bias-down target was attacked to within 1 tick. Oversold RSIs still have potential for retesting the low down to 2764.65. Otherwise, exiting the bias environment back above its 2774.00 bias-down signal would suggest that sellers were absorbed. The 2791.00 bias-up target would become “unfinished business above.”