Post-open Review

Opening action is tracking the topping template.

All of the elements to forming a top have been produced already this morning. As for reversing the trend down? They’re working on it.

The overnight blip-up to fresh highs at 2556.50 was retested at the open. The combined test and retest would have sufficed for being the complex, concerted effort that Friday’s pattern suggested this morning would produce. Just to be sure, another push higher touched 2557.75.

The overnight blip-up had come close enough to satisfy “unfinished business above” at 2556.75-2557.00. Just to be sure, that extra push higher probed them both. Still testing 2557.00 and barely piercing it at 9:45 undermined upside momentum. So did overlapping Friday’s 2555.50 highs at 10:15.

But that was still a bias-up. Its reaction down was testing the 2556.00 pullback limit at 10:15, but it was still a bias-up. Then the reaction down got serious, plunging back down to the 2552.00 overnight low. The pullback limit was violated, lapsing upside momentum. And the 2554.00 bias-up signal was touched within 3 minutes of 10:15 to invoke the grace period. It was still being overlapped at 10:30 to trigger noN-bias.

So, this is not a no-bias, which would have put into play an offsetting test of the bias-down signal. But neither is it a bias-up with a higher objective. The reaction down is free to extend. And since the open’s gap up was still within Friday’s range — not above all prior highs — it extending down wouldn’t leave its retest outstanding as new unfinished business above. Only entering or exiting the noon hour above 2556.00 would help to give buyers traction.

Fresh high reject yesterday afternoon’s slide.

Actually, yesterday afternoon’s slide had been rejected already by closing back above the morning’s 2547.25 low. That robbed the downleg’s sellers of their traction. Resolving back up to the drop’s 2553.25 origin isn’t surprising. But gapping up there is a little aggressive, and risks inhibiting reinforcements.

So, the open reacted down. My pullback target at 2551.25-2552.00 held its test, including a blip-down to 2550.25 that quickly recovered. The 2551.50 bias-up signal has triggered, and the 2555.50 pre-open high is now being attacked.

This morning’s 2556.75 bias-up target is in-play. “Unfinished business above” remains outstanding at 2557.00. Just touching 2556.00 would relieve both from becoming unfinished business above, too.

The question now is whether the probe of new highs will be retraced, and when. Back under 2553.25 and 2550.00 through the bias environment exit and noon hour exit would be increasingly likely to trend down much deeper this afternoon. Withstanding both pullbacks would be vulnerable to trending up into the close.

Upside bias contradicts context.

It’s all about context. Context tells us whether to rely on trending or to suspect it. And if relying on it, what is that trending’s objective. Objectives are a function of pattern structure and calculation. So, it’s all about structure and calculation. And context. Structure, calculation and context. Timing of certain behaviors can provide the context for knowing which structural and calculable objectives are likely. So it’s all about timing, behaviors, structure, calculation and context.

And even then…

Last night’s relentless one-way trending down wasn’t rejected through the open. Neither was it confirmed by a post-open low to prevent a bounce. But not rejecting the overnight decline allows for a bounce, while making that bounce likely to fail.

A bounce did develop, after holding the bias-down signal’s 2549.00 calculation as support through the 10:15 bias timing window. That puts into play an offsetting test of the 2557.00 bias-up signal’s calculation. Structurally, holding support’s test through the open would be rewarded by probing yesterday’s 2553.50 high.

This is all within the context of being in a distributive area. Aggressive probes higher in this range are repeatedly knocked back down. Hard, either post-open, intraday, or overnight into a gap down.

Even then…

The bias signal’s near-term upside gets every benefit of the doubt. In fact, it has already produced fresh post-open highs at 2552.25. Less than 5 points higher would fulfill the bias objective. That’s not a little. And this morning’s recovery attempt isn’t coming from a position of strength, not having quickly rejected the overnight direction. But the upside will get every benefit of the doubt so long as 2549.00 holds as support.

Open’s surge reverses down, but only a little this time.

Having pulled back from the 2549.75 overnight high to 2544.25, greeting the open at 2548.00 could have resumed yesterday afternoon’s recovery. But quickly extending to within 1 tick of the overnight high at 2549.50 was reversed down as quickly. And more so, to 2546.00.

The gap up was shallower than Monday and Tuesday, and so was its reversal down. But the pattern is no less distributive. Also similar to the prior two sessions, today’s post-open reversal down hasn’t extended. It has recovered to 2549.00.

Almost any higher than 2549.00 would put into play a test of this morning’s 2551.50 bias-up signal. There’s also room below to the 2543.75 bias-down signal during this morning’s no-bias environment. Trending after that would be likely, albeit inhibited ahead of this afternoon’s FOMC Minutes release.

Post-open surge collapses. Again.

The distribution template we discussed before yesterday’s open was likely to influence the market from a fresh high. The open probed Friday’s high, but only filled the gap back up to Thursday’s close. Thursday’s high wasn’t touched before price collapsed.

That didn’t change whether the template could still be tracked. Au contraire, yesterday’s action endorsed the template’s active influence. But collapsing was only likelier to require a fresh high, first. And preferably, a fresh high that fulfilled the 2552.00 unfinished business above.

This morning’s open maintained a gap up above yesterday afternoon’s 2547.00 high to suggest momentum was reversing up. A sudden surge probed fresh highs up to 2553.25. And as quickly, 2552.00 was being tested as support. Then broken, as price collapsed to 2543.00.

There is no more unfinished business above required to attract price higher. Even today’s 2549.00 gap up was under prior highs, so it doesn’t require a retest from below. That room for a pullback down to 2536.00 would no longer be a pullback, but a trend reversal. So, resuming the rally despite no upside requirement would be bullish.