Post-open Review

Gap up is retraced.

Gapping up to the 2473.50 bias-up signal blipped-up to touch the 2475.00 pre-open high. That was done while hovering at the open, maintaining the gap up. Maintaining, but not extending. The opening 15 minutes of volatility lapsed, and so did support, as price collapsed to attack 2467.00.

An offsetting test of the 2465.50 bias-down signal is in-play. It is being attacked now to within 3 ticks, so it won’t become “unfinished business below” if left outstanding. Its test should define the morning window’s lower-end. So, a bullish scenario would not only pierce or overlap it but also try probing under it. This impatient pessimism could be bullish from a contrarian perspective.

We began tracking a Head & Shoulders after Thursday’s close. The overnight / pre-open high held a test of the pattern’s left shoulder. That doesn’t require completing the pattern and launching a downleg, but it makes that bearish resolution more possible. There’s still potential down to the left shoulder’s 2362.75-2363.50 lows without yet confirming the downleg underway. And recovering 2470.25 would help to resume the rally.

Opening surge falls flat.

The overnight dip to 2461.50 from2467.00 had recovered entirely before the open. The open blipped-up to touch 2469.00, and then reacted down 4 points. The ultimate resolution to that test at 9:45 would make the 2465.50 bias-up signal more or less likely to trigger at 10:15. But another bounce touched 2469.00 at 10:15.

Buyers had a chance to test 2465.50 from a position of strength. Not for lack of trying, the chance wasn’t exploited. Neither was it rejected, but retesting 2469.00 reacted down to test 2465.50.

That also resolved down. The grace period was invoked, but late bias-down has triggered and 2462.00 was just touched. Testing and recovering from a retest of yesterday’s lows and this morning’s 2458.50 bias-down target could satisfy sellers for the balance of the day to recover.

Meanwhile, just retesting yesterday’s lows need not recover. It’s not timely, so it’s not optimal, but it’s still credible for duplicating yesterday’s plunge.

Post-open dip takes longer than expected to recover.

I described two bullish scenarios during the Market Tour. Of course, one bullish scenario would have maintained a gap up above prior highs, if not also extended it through the open. The second bullish premise would have reacted to gapping up dipping, and then resuming the rally for only the morning.

The open’s gap up to 2480.00 reacted down immediately. But it wasn’t just a dip. Touching 2476.25 reacted up 2 points, only to be resisted by this morning’s 2478.00 bias-up signal. Its test reacted down again to 2475.75.

No-bias. With an offsetting test of the bias-down signal in-play.. Except…

The 2478.00 bias-up signal was touched in time to invoke the grace period. Which triggered the bias-up, late. The bullish scenario developed, albeit late and lower. The 2484.00 bias-up target is in-play, but it’s not required like an optimal setup would have done. Back under 2476.50 would signal the recovery had failed anyway.

Gap up not exploited, or reversed.

Pre-open action had probed yesterday’s 2478.75 high by a full point. Yesterday’s high is also this morning’s bias-up signal. It was last touched 2 minutes before the open, which was only 1 tick lower. An offsetting test of the 2469.00 bias-down signal won’t be required for not triggering bias-up, but it would be an attraction.

Gapping up above yesterday’s highs could have formed a “session-long rally” setup. Had triggering it rejected an effort more substantial than 1 point, then the setup’s opposite resolution would be likely. We can give a fresh session low that benefit of the doubt, but not otherwise.

Probing higher anyway this morning would be doomed to failure, if not this afternoon during the FOMC reaction, then tomorrow. Probing above the bias-up signal through 10:30 would invalidate the 10:15 no-bias signal. Fresh highs would be likely, but still doomed to failure.

Gap up retraces, but not reverses.

Rallying out of Europe’s opens ultimately extended 10-11 points. Post-open enthusiasm did not follow. The 2478.00 opening print added a single tick before reversing back under this morning’s 2477.00 bias-up target and Thursday’s 2476.25 new Globex trend extreme.

The reaction also probed under “lower prior highs” down to 2472.50. It was already a little late for only threatening to reject the 2472.00 bias-up signal, let alone not even touching it. So it triggered. This is a bias-up environment, whose target has been met.

Overbought RSIs at the 2478.25 high don’t require being retested since they develope3d during the open. But the 2478.00 opening print above all prior highs does require being filled. At least, at some point, not always before a more significant reaction down.

Filling the open’s 2478.00 gap without exiting the bias environment above the open’s high would suggest a top is forming. Meanwhile, back under 2473.75 at any time would start to signal momentum reversing down for a deeper correction.