Mid-day Update

Only one attraction above, but plenty below.

This morning’s bias environment did not probe the opening range’s high, but it probed the opening range’s low. And now the noon hour has probed the bias environment’s low. If the gap up were capable of forming a “session-long rally” setup, then it has inverted into a session-long decline. So, either this afternoon’s bias environment or the final 60-90 minutes is likely to probe lower, too.

A test of this morning’s 2199.75 bias-down signal was put into play for ultimately holding a test of the 2207.75 bias-up signal. It has become “unfinished business below.”

An offsetting test of the 2192.75 bias-down target was not triggered, but only because the 2213.25 bias-up target was missed by a single tick post-open. It had been probed pre-open.

Even threatening 2192.75 would suggest that 2187.50 will be retested, too.

Meanwhile, the open’s gap up above prior highs was maintained through the opening 15 minutes of volatility. It created an anchor that suggests the 2211.25 opening print will be retested, regardless of the interim dip.

The only other unfinished business above continues to be the 2220.00 objective put into play by recovering 2192.00 last week.If somehow tested prior to neutralizing attractions below, it would be vulnerable to reversing down sharply, as has been the case with each other attraction above.

Morning’s bounce has extended.

This morning’s 2203.75 bias-up signal defined the bias environment’s upper-end, but only for as long as was necessary. A brief dip within 10-15 minutes of the bias environment lapsing was resolved by resuming the rally up to 2208.00.

Now the afternoon’s 2208.50 bias-up signal is being touched. It should define the afternoon bias environment’s upper-end — at least until coming within 10-15 minutes of the bias environment lapsing at 2:30.

Not yet resuming the decline for this long suggests that a bigger detour is underway. “Unfinished business above” at 2210.50, 2211.50 and potentially also 2220.00 are all possible on this rally leg. Albeit a temporary rally leg, since yesterday’s action all but ensures probing eventually under 2192.00.

Still no follow-through to two attempted sell-offs.

The overnight drop to 2199.50 was recovered 10 points up to 2209.50 through the open. It was retraced to within 3 ticks after reacting down to 2201.25.

This afternoon’s 2208.00 bias-up signal held its test to avoid triggering. But this morning’s 2211.50 objective has become “unfinished business above.” Probing above 2208.00 at the bias environment exit would be likely to extend up to 2211.50.

Meanwhile, a deeper pullback has room to test 2202.00. Probing lower when the bias environment lapses would likely trend down through tomorrow’s open.

Rate hike clues about to be released.

We’ve been discussing for almost two months how the market has adapted to the potential for a rate hike. Knee-jerk reactions not withstanding, price action following good and bad econ reports has suggested getting it behind us would be bullish. Of course the actual FOMC decision would trigger a dip. But the ultimate resolution would likelier be a strong rally as that bad news becomes history.

So, this afternoon’s FOMC Minutes might trigger a knee-jerk reaction down if they reflect a willingness to raise rates. But that’s largely anticipated, so a dip would likely be temporary.

A deeper drop could follow Minutes that suggest less hawkishness. And similar to a rate hike’s knee-jerk reaction up, dovish language in the Minutes would likely first trigger a knee-jerk reaction up.

Some higher high remains likely at some point to satisfy this morning’s 2204.25 objective. Exiting the bias environment under 2104.00 would delay that upside objective for another day.

Don’t forget that after the FOMC Minutes reactions, the only influence is volume quickly evaporating ahead of the holiday. Try to avoid getting caught in an illiquid market, or expecting sponsorship to break beyond a range.

Noon hour’s bounce stops at resistance.

This morning’s 2202.50 bias-up target overnight is now “unfinished business above.” Meeting it overnight doesn’t qualify as fulfilling it, not before even triggering the 2197.00 bias-up signal at 10:15. And bias-up wasn’t rejected at 11:30, despite the morning bias environment returning to yesterday’s 2192.00 last relative low.

Add it to the 2203.00 overnight high’s “new Globex trend extreme” which requires intraday retest. Add them to the 2220.00 objective put into play by yesterday’s close above 2192.00. And don’t forget today’s 2200.00 opening print. It gapped up above all prior highs, all but requiring a retest after dipping back under prior highs.

So, the reaction down seems to have bottomed upon testing yesterday afternoon’s lows at 2192.00. Seems to have, except a bounce up to this afternoon’s 2196.75 bias-up signal didn’t trigger. Firming further this afternoon is still possible, and would likely reach overnight highs. Otherwise, fresh lows could test 2191.00, and its break would target 2182.00.