Post-open Review

Flat-to-higher open should be a lot higher.

The pre-open rally pierced the 2646.50 overnight high. Its recovery post-open would have signaled the last dip to 2635.25 had held, and that momentum was reversing up. But its reaction down into the open tested yesterday’s last-minute 2638.00-2639.00 lows.

A blip-up touched the 2643.00 bias-up signal before dipping back into the range. No-bias triggered, putting into play an offsetting test of the 2636.50 bias-down signal. But that didn’t prevent another bounce testing 2643.00.

The bounce came too late to trigger bias-up or to invoke the grace period. And it didn’t improve in time to invalidate the signal. Probing fresh highs now would be “no-bias trending” and required to retrace back down.

Falling to fresh lows would not be required to extend down. But it would be the last opportunity to defend against a bigger decline, since there’s still no “unfinished business above.”

Overnight range fails early attempt to extend gap up.

Gapping up sharply last night only ranged sideways into today’s open. Essentially defined by 2656.00-2662.00, the 2660.00 open soon pierced a fresh high above 2665.00. The fresh high was largely maintained through the opening 15 minutes of volatility to form an anchor. If not extending higher, a pullback would be likely to recover.

That’s being put to the test now. Reacting down fell more than 4 points in only several minutes, reflecting impatient sellers. Only 38.2% of the first reaction down was retraced before probing lower, also reflecting impatient sellers that prevented retracing a more constructive 61.8% first.

Extending down to test 2658.00 is now reacting up. A buy signal at 2661.25 is being tested. Gaining traction would target 2667.25. Otherwise, back under 2658.00 would start to signal a deeper decline underway.

Meanwhile, there’s no “unfinished business above.” This morning’s renewed bias-up environment has met its next targets. The opening print was above all prior highs, but it has now been tested from below — the dip to 2658.00 touched Wednesday’s prior high as support before bouncing back to the open — which neutralizes its attraction above.

Also meanwhile, NDX is plunging into negative territory, continuing the underperformance we discussed during this weekend’s Saturday Review. More so, the Dow continues outperforming by extending to fresh highs while the SPX control group remains range bound. Speculative fervor is cooling. Leaving only the open’s anchor, which doesn’t necessarily have an immediate effect, to recover a drop if the anchor hasn’t been retested already.

The overnight recovery from 2631.25 ultimately filled the .

The overnight recovery from 2631.25 ultimately filled the gap back to yesterday’s 2647.00 cash session close. Probing its resistance held though the open, and reacted down to 2643.00. Neither bias signal was touched or attacked through the first half-hour. Or through the 10:15 bias-timing window.

The 2651.00 bias-up signal was attacked before the first hour began lapsing. There was still plenty of time before 10:30 for its recovery to invalidate the no-bias. Anxiousness ahead of the (planned) tax reform vote is clearly influential.

The 2651.00 bias-up signal should define the bias environment’s upper-end if tested before the window starts lapsing at 11:30. Probing above it would be “no-bias trending” that requires retracing to the bias signal or lower. No-bias trending in this pattern could test 2654.50.

Meanwhile, back under 2646.00 (being tested now) and 2644.25 would start to signal another downdraft underway, instead. And without the open having formed any anchor in positive territory, a downdraft would have little limitation into the weekend.

Gap up maintained.

The pre-open high eventually touched 2636.75. It was an errant tick above this morning’s 2635.50 bias-up target, and it was retested by the open’s surge.

The open gapped up above yesterday morning’s 2634.50 high and trended straight up to new highs attacking 2640.00. Its reaction down stopped 1-2 ticks short of actually touching 2634.50 before extending even higher to attack 2641.00.

Exceeding the 2636.50 bias-up target at 10:15 renews the bias-up signal. But backing-and-filling is still possible. Maintaining the gap up has formed an anchor that is likely to recover in case of a reaction down. Being bias-up allows room down to the 2630.50 bias-up signal just as noise in the range. And already having extended 4-5 points above the bias-up target does rob a lot of energy.

Currently, another dip is testing 2635.50 as support. Its break would suggest that backing-and-filling is underway. Otherwise, extending higher this morning would require reinforcements, which would make the slope steeper and more aggressive.

Sellers pounce on bias-up target like the plague.

The open was greeted at or around the 2628.50 bias-up signal. A brief bobble soon surged to fresh highs at 2631.50. The opening 15 minutes of volatility then lapsed. Any higher by then would have been likely to trigger bias-up. The delay didn’t prevent fulfilling the 2633.50 bias-up target anyway. But probing it by 3 ticks into the top of the hour was premature.

Premature, and impatient. Potentially the stuff of weak-handed sponsorship. Its reaction down didn’t collapse immediately. But its eventual collapse down to 2625.25 overlapped the 2628.50 bias-up signal in time to invoke the grace period (3 minutes either way of 10:15).

Late no-bias triggered. An offsetting test of the 2617.50 bias-down signal is in-play. An interim bounce up to 2630.75 has resolved down to 2624.50. Today’s session could become defined as backing-and-filling into negative territory, without resuming the rally. And that would be bearish one day following yesterday’s rally to new highs.