Post-open Review

Still waiting on Step 2: start rallying.

Bullish WedEX has accompanied a previous Sunday night collapse and its recovery. Perhaps expiration has started having a more global influence. But I’m not yet making that adjustment. We’ll still judge its performance by whether this morning rallies past the open.

We’re still waiting.

The overnight drop was retraced all the way back up to 2580.25, whose recovery through the open would have been optimal. The opening bar only touched it before spiking down to touch 2577.00. Any lower through the open would have turned us bearish.

Ultimately, no-bias has triggered. Not touching and rejecting the bias-down signal post-open means an offsetting test of the bias-up signal is not in-play.

Rejecting overnight tests of both bias-down parameters usually produces at least an eventual test of the bias-up signal, anyway. There’s room to test it until the no-bias environment lapses. There’s also room for a dip to test the 2575.25 bias-down signal, with room for noise down to 2574.00.

It was already a concern that isolating the probe under Friday’s lows to the overnight wasn’t rewarded by trending up post-open. Now that has become suspicion since fresh highs up to 2581.25 haven’t yet accelerated.

Recovering still gets a benefit of the doubt, whether or not this morning. But probing under relevant support through the bias environment exit would be bearish.

REMINDER: I’M AWAY FROM THE SCREENS AFTER THE OPEN UNTIL NOON.

The overnight tests of this morning’s 2580.25 bias-down signal produced bounces to 2584.50 and 2585.50. The open was nevertheless greeted back down at 2580.25. The opening 15 minutes of volatility fluctuated around it until a last-minute blip-down pierced fresh lows.

Blips-down are spikes that blip back up. As this one did, recovering to 2582.25 through the first half-hour, and another point higher after the first half-hour. But only temporarily, blipping-down again under the open’s range. And invoking the grace period.

2580.25 ultimately held at 10:30, but it was overlapped 1-2 minutes before and after. It’s not a reliable no-bias signal, which would have put into play an offsetting test of the 2588.00 bias-up signal. Being an expiration session doesn’t help this morning’s predictability. Sellers aren’t necessarily marginalized, and there’s not a reliable upside attraction. Another downdraft remains possible.

Meanwhile, another setup that triggered, signaling inertia. Four of the first hour’s 15-minute checkpoints overlapped the same relevant price. Just three would be enough to suggest the morning won’t trend. So, more than at any other time, be careful not to force a trade this morning.

Gone until noon. Gladly.

Gap up extending sharply.

Buying the open was justified. The bullish scenario essentially required maintaining its gap up, if not also extending it. And opening at or above 2574.00 was the first hurdle to also exceeding 2577.00 through a relevant timing window.

The 2574.00 open surged immediately to attack 2578.00, testing an inflection point at 2576.50. Fluctuating around it no deeper than 2 points maintained the gap up, and finally resolved up to higher and higher highs. Exceeding the 2573.75 bias-up target through 10:15 renewed the bias-up signal, although it’s irrelevant since the renewed target is already met.

Hesitation at 2580.25 stopped pessimistically short of filling the gap back to Monday’s 2582.00-2583.00 close. And 1-minute RSI actually got more overbought during the consolidation. The setup resolved up sharply, confirming that sellers are not being influential.

Rallying more steeply than the decline’s slope suggests that this is a correction. Impatience is a common characteristic. Regardless, keep in mind that corrections are not sponsored by strong hands, and we’re expecting an eventual resolution down. But currently there’s room down to 2577.00 before signaling the bounce is reversing.

Air pocket is retraced.

Bouncing off the 2562.00 overnight low attacked 2570.00. Its reaction down retraced 61.8% of the bounce, a constructive pullback — if it could hold. But greeting the open at this morning’s 2566.00 bias-down target immediately slipped. An air pocket under 2563.75 triggered a sell signal 2 ticks lower, and plunged 8 points to 2555.50.

2557.50 was the air pocket’s minimum objective, and it was only overlapped, not broken. Ranging there launched a rally that retraced the post-open drop. All of it. Gapping down through the 2566.75-2568.50 area has recovered back through its upper-end to 2569.25.

Entering the noon hour above 2570.00 would be constructive to isolating sellers to the morning. Exiting the noon hour above 2574.00 would help to confirm. But back under 2566.00 would target at least a pullback to 2560.00, and potentially an even deeper decline.

The challenge here couldn’t be more relevant. Trapping this morning’s drop would suggest it is a capitulative end to the pullback from last week’s highs (see the bigger picture chart below). There is a brief opportunity to bottom after fulfilling and reacting to downside targets and supports. NOT isolating sellers by today’s close — instead, letting them gain traction for the open’s effort, and not letting the recovery gain traction for its effort — would further suggest a deeper decline is underway.

The lows that yesterday left outstanding.

Yesterday’s opening rally would have been more substantial had it originated from a slightly deeper opening dip. And had that dip recovered a relevant level through the open. Its shallow, premature origins didn’t prevent surging. But the surge was limited. And it was retraced entirely to touch yesterday morning’s open 2572.50 before today’s open.

This morning’s open tried to hold. Its wide 5-point 2571.00-2576.00 range ultimately resolved down, sharply. An air pocket opened down to 2564.25, 3-4 points under the downside potential that yesterday’s premature rally had avoided. But what about its recovery.

Recovering 2570.00 into the bias environment would have signaled sellers were done. But 2570.00 was still being overlapped at 10:15, and also at 10:30. That’s not enough, and it’s too late to do more. Too late, and too early. Exiting the bias environment at 11:30-noon above its 2578.00 bias-down signal would serve by proxy as if 2570.00 had been recovered earlier.

Meanwhile, the open’s low could be retested. Back under 2568.00 would trigger it, which is being attacked now. Recovering from the low’s retest could still recover. Recovering from the low’s retest is less likely, and very vulnerable simply to extending the decline.