Mid-day Update

Dip fulfills near-term attractions below.

The open’s initial dip touched this morning’s 2339.75 bias-down signal. Not triggering it put into play an offsetting test of the 2350.50 bias-up signal. It was tested, but also probed up to 2356.00.

Probing beyond either bias signal during a no-bias environment is “no-bias trending,” which requires being retraced — at least back to the bias signal, and often back to the 10:15 or 1:20 bias timing window print.

Dropping back down to 2345.25 essentially retraced both. And being within 3 ticks of the 2345.00 bias-down target fulfilled it, too.

This is still a bias-down environment, so its 2350.00 bias-down signal should define the window’s upper-end. Breaking higher would be a “bias-down rally,” and like the no-bias trending, would require retracing back to the bias signal.

2350.00 is being tested now. Breaking higher during the bias environment is unlikely to be attempted, and would be doomed if tried. Regardless, breaking higher at all would target a retest of overbought RSIs at this morning’s 2356.00 high.

Morning recovery not yet rejected.

The session’s first hour had trended down from 2342.00 to 2333.00. Another 2 points lower was targeted for having triggered bias-down. But suddenly an 11-point spike up was revisiting 2342.00.

Whatever triggered that recovery remains unspecified. But it was apparently more bullish than London’s terror attacks were bearish. Consolidating amid the headlines eventually resolved by spiking up again, 9 points to 2348.00.

That was 6-8 points into positive territory. And it was too shallow to invalidate the bias-down, so 2331.00 is “unfinished business below.”

A descending triangle that formed into the noon hour broke lower to test the 2336.75 bias-down signal. It didn’t trigger. Its reaction up to 2344.00 is back to unchanged around 2341.00.

The rally’s catalyst probably isn’t the opposite of what triggered yesterday’s plunge. Whatever it is might not be enough to avoid fresh session lows, let alone extending down to 2327.00 or 2317.00. But exiting the bias environment at fresh session highs would get every benefit of the doubt for extending higher near-term.

Is it possible for today’s drop to both begin and end a correction?

It’s very rare for a bias signal to be invalidated. This morning’s no-bias signal was triggered by having failed to maintain the probe above its 2374.00 bias-up signal at 10:15. It was nearly invalidated by probing under its 2364.75 bias-down signal at 10:30, except that it was still being overlapped.

Only one more opportunity remained to invalidate the bias signal. And it was exploited by exiting the bias environment under its 2359.75 bias-down target. Whatever had developed to change the environment so substantially, its new sponsorship is strong-handed. This morning’s bias-up target is not unfinished business above.

Sort of. This morning’s bias-up target is also essentially already unfinished business from yesterday at 2380.00. But for purposes of near-term trending, strong hands are sellers.

The drop’s objective at 2342.00 is being tested now, and probes under it down to 2340.25 are also overlapping it. Any lower could test a prior pattern’s “lower prior highs” down to 2335.50.

Here’s an interesting feature to patterns which is counter-intuitive. Drops that originate from a new high or during its initial reaction down are likely to last through multiple sessions, and then be likely to recover. Drops tend to take one of two widely disparate paths — either out-sizing the high’s initial reaction down in depth and duration, or else running its course very quickly.

So, today’s drop comes after a new high’s reaction has been retraced back toward the high. This is originating from a lower high. It might be short-lived, ultimately holding its test of 2342.00. And if not, it could be much deeper, next targeting 2310.00.

Morning’s influence lapsed, none other yet appearing.

Was the bullish WedEX influential? A gap down did define the morning’s low. And its reaction did probe back into positive territory. That’s hardly optimal.

Regardless, any WedEX influence lapsed when this morning’s bias environment was exited.

RSIs diverged negatively at this morning’s 2376.00 high, which had room to react down to 2372.00. It was tested and retested, while the noon hour fluctuated 5-6 ticks either way around 2373.00.

So, this morning’s post-open bounce hasn’t reversed momentum up, and there’s no requirement to extend the bounce any higher. The next move is in search of sponsorship — whether that is to resume the morning’s recovery, or to resume the overnight drop, or to stretch the rubber band by testing either post-extreme before snapping back.

Still ranging, with the expiration influence.

Neither bias signal was touched in triggering no-bias this morning, and again this afternoon. Room down to this morning’s 2375.25 bias-down signal was utilized, eventually down to 2373.75 as the bias environment began lapsing. But trending up into and out of the noon hour has touched 2380.00.

2380.00 is this afternoon’s bias-up signal. It was touched well after having potential to trigger. So, like this morning’s bias-down signal, it should define one extreme of this timing window.

Unlike this morning’s extreme which reacted in the opposite direction, this afternoon’s bias environment should break. That would be the likely influence of the bullish WedEX.

Breaking above 2380.00 after the bias environment begins lapsing would be free to extend higher into the close. Simply absorbing any downdraft would fulfill the WedEX, and still be capable of extending higher aggressively Monday morning.