Post-open Review

No clear path or volatility.

Sunday night’s opening rally to 2477.50 was within Friday’s range. Its gradual retracement overnight was within the opening rally’s range. Sponsorship, such as it is, isn’t attempting anything not produced already. Opening flat could have attracted intraday sponsorship, but didn’t. This is a “dry cleaners morning,” often better spent running errands.

Having said that, holding the open’s test of unchanged does suggest that sellers aren’t retaking control. Potential for probing into negative territory can’t be prevented, but it would likely be recovered.. Meanwhile, probing into negative territory isn’t at all required.

The overnight retracement of its initial rally does reflect some degree of restrained optimism. Especially when the past two weeks are dense with gaps up. Failed gaps up. So, could that be Pavlovian conditioning at work? It was too muted to be sure, but a more obvious downdraft would still be likely. And there’s room under 2472.50 to test the 2467.75 bias-down signal.

Gap up extends, but still resolves down. Briefly.

So much optimistic sentiment ahead of so weighty an item as this morning’s payrolls suggests this is not a market that wants to stand still. Greeting the report more than 7 points off of overnight lows only bobbled briefly, but didn’t back off. Post-open action extended higher.

In fact, the 2477.75 post-open high probed the past week’s worth of prior highs. But only briefly. The setup was essentially 1 tick away from signaling a very bullish morning ahead. But back under 2475.75 would indicate otherwise. No particular downside pattern was likely under 2475.75. And there wasn’t much of one. Only a straight line to 2469.25.

But, wait. There’s more. The plunge to 2469.25 wasn’t required to resolve with any particular characteristics. But it has been a straight line, too. Up, testing the 2474.50 bias-up signal at 10:30.

It’s too late to invalidate the no-bias signal that already put into play an offsetting test of the 2466.25 bias-down signal. But this reaction up was the best possible effort. Unless extended higher anyway, this bounce is vulnerable (if not also likely) to producing a second post-oipen  drop — something missing from the past couple of weeks.

No gaps, no give, no go.

Gapping up isn’t necessary to rally this morning,, or even this afternoon. The weak open merely needed to avoid being or becoming too weak — stay away from yesterday afternoon’s low, at least through a relevant timing window.

That’s where we are. The pre-open high at 2474.50 reacted down into and out of the open, extending to 2468.50 before both 1-minute and 3-minute RSIs diverged positively. That didn’t have to bounce, but it has, attacking the 2473.00 open.

The probe above yesterday’s highs may soon be underway. Not much higher would make that very likely. Meanwhile, back under 2470.00 would signal a move to fresh lows at 2466.50.

More hovering post-open finally capitulates.

Yesterday afternoon’s narrow ranging had become likely to resolve down. The shallow overnight gain in sympathy to AAPL’s earnings reaction wasn’t greeted any more enthusiastically post-open. Hovering soon became dipping, and dipping has become collapse.

Yesterday afternoon’s 2471.75 sell signal that never triggered was supportive when touched during the first half-hour. Its 3-point bounce’s failure didn’t find support until testing the 2468.75 bias-down signal. And then only briefly as the reaction has extended down to 2466.00.

The bias-down signal wasn’t even touched by 10:15, triggering no-bias. But probing under it is NOT “no-bias trending,” because the probe originated before 10:30 and was maintained. This morning is an “invalidated no-bias” environment. The bias-down signal is NOT required to define the window’s lower-end.

1-minute RSI just diverged positively on a retest of the low, while 3-minute RSI left oversold territory. It’s not a buy signal, but vulnerable to a bounce. And it comes 1 tick short of being within 3 ticks of yesterday morning’s 2465.00 objective, which would have neutralized its “unfinished business below.” The burden of proof is still on buyers.

Another gap up fails.

Not just another gap up. A second consecutive gap up to prior highs, that failed to exploit its opportunity to extend higher. Buyers didn’t gain traction yesterday, so this morning’s path higher required extending a gap up. Not extending almost immediately at the open undermined the bullish template.

A bullish scenario could have quickly tested yesterday afternoon’s 2470.50-2471.75 “lower prior highs” and rallied out of the open. Testing lower prior highs during the open only sat there, shutting that rally’s door.

Ultimately, the 2473.00 bias-up signal failed to trigger. The late no-bias environment has put into play an offsetting test of the 2465.00 bias-down signal. Even more ultimately, the ongoing Head & Shoulders pattern has continued forming a right shoulder, and risks extending down to trigger a new downleg.