Post-open Review

It was about the money. And relief rally is underway.

Indictments were unsealed before the open, and they are basically tax evasion charges. No association with the Trump campaign or Russian collusion in any way. There wasn’t an immediate relief rally, but the overnight dip ended. The open’s first intraday opportunity to react was a blip-down that pierced the preliminary 2571.50 level by 1 tick. It snapped back up to 2575.25 before the opening 15 minutes of volatility had lapsed.

My pre-open comments to the chaRTroom had identified the 2571.25 area a compelling buy, but preferably AFTER first touching the 2569.75 bias-down signal. That predicate didn’t happen. Consolidating through the bias timing window has resolved up to 2577.50. Its recovery through the open would have been bullish. Its recovery now would be likely to fill the gap back up to Friday’s 2578.50 close.

Meanwhile, the White House has issued a statement that the indictment doesn’t involve it, and alludes to involvement with Hillary Clinton’s campaign manager. It’s too late to trigger bias-up, but probing Friday’s 2580.75 high during the no-bias environment can’t be dismissed. Back under 2573.50 would suggest yet another, bigger shoe is dropping.

Pre-open resistance test pushes back to support. Which pushes back, too.

The overnight rally had pierced this morning’s 2569.00 bias-up target by 1 tick. Its reaction down through the open touched this morning’s 2563.50 bias-up signal. A bounce retraced 61.8% of that drop, and dipped back down to 2563.50. RSIs diverged positively on the retest and launched a slightly bigger bounce.

Reaction to a favorable Fed headline triggered a surge through the overnight high up to 2572.50. That was done in 3 minutes, but consolidating since then has held at least 3 ticks above the 2569.00 bias-up target. So, this morning’s bias signal is renewed.

Renewed bias-up effectively targets a retest of Sunday night’s 2577.25 high. One caveat to extending higher is the surge’s catalyst being a headline. Renewed bias-up is less reliable anyway, and the bias-up environment is required only to be supported by the 2563.50 bias-up signal if retested.

Back under 2569.00 would threaten a morning retracement, and it’s being tested now. But fresh session highs would help to confirm the morning’s rally is extending higher, especially if maintained when exiting the bias environment.

Is post-open action a smaller version of the bigger pattern?

Firming up to 2563.25 greeted the open at the 2561.50 bias-up signal. An eventual break higher retested the pre-open high, briefly. Then price started slipping, and slipping.

Yesterday’s 2557.50 high was just tested as support. Along the way down, bias-up failed to trigger at 10:15. An offsetting test of the 2550.50 bias-down signal is now in-play.

Reacting up to 2560.00 stopped short of even threatening to invalidate the bias-down signal. But the reaction also prevented the first hour from extending its slide back into yesterday’s range. The burden of proof is now on sellers to resume the decline before the bias environment begins lapsing. The slide is likelier to resume later.

Meanwhile, backing-and-filling just attacked 2563.00, within the context of being a corrective bounce (after 10:30, so it’s too late to invalidate the no-bias signaled at 10:15). Back under 2561.00 would start to signal the bounce has failed, and is resolving down. Probing any higher would be “no-bias trending” and doomed to failure.

Open fails to exploit its isolation.

Rallying this morning required the open to maintain its recovery back above yesterday’s 2563.50-2564.25 lows. Isolating the overnight lows, or not, would be likely to extend in that direction. That’s where the open was greeted, but post-open action stopped 1 point short of 2566.00, whose recovery through 9:45 was part of the bullish setup.

Reacting down through the first half-hour probed the overnight low down to 2559.25. The 10:15 bias timing window was within a few ticks of fulfilling the 2557.50 bias-down target. Oversold RSIs at 2556.00 require its retest, suggesting that a premature rally effort would fail.

The first hour has already touched 2566.00. And there’s room down to 2554.00 before even threatening to reverse the trend down. Back above 2560.25 would start to signal this morning’s sell-off being recovered, regardless of “unfinished business below” at the low’s oversold RSIs. Regardless, closing above 2562.00 would suggest that sellers are done.

Post-open dip fills gap.

The overnight recovery had resumed pre-to test tested the 2568.25 bias-up signal by 3 ticks. That was quickly pierced by another tick post-open. Any higher would have triggered a buy signal, but its touch held. And its reaction plunged 5 points — down through a 2266.25 sell signal to 2264.50.

The low’s retest touched 2263.25, filling the gap back down to yesterday’s 2263.50 close. That’s natural support, and it has produced a bounce back up to 2566.25.

Meanwhile, holding a test of this morning’s 2568.25 bias-up signal has put into play an offsetting test of the 2560.25 bias-down signal. Back above 2567.50 would start to suggest the gap-fill has produced enough support for a detour back up to yesterday’s highs.