Post-open Review

Gap up surges its way to new highs.

Gapping up didn’t kill the WedEX’s bearish influence. Neither did extending higher. Printing a higher high after the first 15 minutes of volatility did the deed. WedEX is dead.

We’d already been observing bullish behavior, at least to create an anchor for recovery purposes in case of reversal. There was no reversal. Gapping up to 2440.50 blipped-down 2 points and quickly recovered to extend the rally. A Running Correction up to 2443.00 (remember that) resolved up while 3-minute RSI became persistently overbought.

3-minute RSI remains persistently overbought, for now, while new highs probe 2445.00 is probed up to 2450.00. The renewed bias-up is fulfilled. There’s room for noise above at 2453.00, but no requirement to reach it.

Overbought RSIs at 2450.00 require its eventual retest. Near-term, back under 2446.50 would start to signal a corrective dip underway. Its target would be 2441.50, the lower quadrant of that Running Correction I mentioned above.

Pre-open pullback extends lower post-open.

How was the open going to resolve its test of Wednesday’s 2435.50 close? Its test was indicated during the Market Tour. But it never got the opportunity to fill the gap. Instead, the earlier 2429.75 overnight low was retested as support. And the open slid easily through it.

Reversing back through one overnight extreme isn’t a reversal signal. Not alone. Not without first having extended the prior day’s trend. That defines this morning’s open, which has extended down sharply to 2421.25.

The 2425.25 bias-down signal triggered late, putting into play its 2418.75 bias-down target. RSIs are making higher lows — albeit higher oversold lows — so an interim bounce can’t be discounted. But momentum remains down so long as 2426.25 isn’t recovered. Back above 2428.00 would start to signal a bigger bounce.

And they’re swimming at much lower depths.

The overnight low had reached 2416.50, still 1 point short of neutralizing Monday’s 2415.50 unfinished business below. Wider and wider swings through the 10:15 bias timing window tested 2424.00-2425.00 above, and ultimately returned to the overnight low.

Ultimately may be a bit misleading when four swings have already measured 5, 6, 7 and 8 points. Even returning to the overnight low has reacted up already by almost 4 points.

Back above 2427.75 through a relevant timing window would suggest a bottom is being formed, or that momentum is already reversing up. Otherwise, oversold RSIs at Friday’s 2412.50 low require a retest, too. But it’s not likely support. Breaking more than 1 point under 2415.50 would more likely extend down to 2409.25 and 2407.00. There’s room to 2399.00.

Pre-open recovery too much too bear.

The overnight rally had extended to 2442.25 when news broke the shooting outside Washington, D.C. Its 4-point reaction down to 2438.25 was reversed back up quickly. Too quickly, before any accumulative activity could develop. That triggered a warning in the chaRTroom.

It also triggered a reaction down. Friday’s 2443.50 high had been attacked to within 1 tick. Reacting down through the open has returned to the 2435.00 overnight low, now piercing it by 2 ticks.

Opening above the 2440.25 bias-up signal and not triggering it has put into play an offsetting test of the 2433.00 bias-down signal. Testing it before the afternoon FOMC events will be likely so long as interim bounces hold any test of 2438.00.

And briefly extended. But not uptrending.

The 2433.50 overnight high had reacted down pre-open to within 1 tick of this morning’s 2429.25 bias-up signal. The pullback was retraced entirely into and out of the open. It soon extended to 2436.00. And just as soon retraced the extension.

This creates an anchor. In case of a reversal down, the context ensures its complete recovery. And a reversal down remains possible, because the extension wasn’t maintained. The reversal down would become much less likely if the bias environment continues fluctuating around the 2433.50 — especially if it has already begun extending higher.

Higher highs were next target 2438.00, and then a retest of Friday morning’s 2443.50 high up to 2445.00. Otherwise, back under 2430.50 would initially target a test of yesterday’s “lower prior highs” at 2425.25 and lower.