Mid-day Update

Trying again to recover from under Friday’s highs.

This morning’s late no-bias had put into play an offsetting test of the 2153.50 bias-down signal. It was attacked to within 3 ticks during the bias environment. That didn’t neutralize its attraction, but it was enough to prevent becoming “unfinished business below.”

Its business was finished, anyway. Bouncing to 2161.00 ran into the resistance of Friday’s high. Reacting down during the noon hour touched 2152.25. Ultimately, 2153.50 held as support.

2153.50 is also this afternoon’s bias-down signal. It held its test to trigger no-bias. An offsetting test of the 2164.75 bias-up signal isn’t required. It was attacked to within almost 2 points, but Friday’s 2161.00-2162.00 highs once again resisted the recovery attempt.

Backing-and-filling this morning was possible, and could have recovered to and through the overnight high. This afternoon is still backing-and-filling, and could still launch a recovery. The alternative isn’t necessarily a downleg, but higher would be  safer.

Relentlessly higher highs following the setup’s template.

Having trended down into the prior session’s close, gapping up above its afternoon bias environment high can form a “session-long setup.” All but one intraday timing window would then probe its prior timing window’s high. That exception tends to be the noon hour, or else the last 60-90 minutes.

Occasionally, the exception is the morning’s bias environment. But not today, after it extended the post-open 6-point surge from 2108.00 another 7-9 points to 2121.00 and 2123.00. And it’s not the noon hour, which immediately probed a fresh high.

All of which assumes this is a session-long rally. It may be, but developing with an interim weekend is not reliable. Nevertheless, we’ll still tack the timing window template.

Price action since the noon hour’s initial surge has ranged flat to lower, only slightly lower, testing 2122.00. A deeper pullback could end at 2118.25 or fall to 2113.50, and still not signal the trend reversing down. Probing a fresh high during this current bias environment would enable raising the sell signal, but not the potential attraction’s below.

Complying entirely with the template for a session-long rally wouldn’t make its other features any more reliable. But I should note that when the setup’s timing windows do extend correctly, the following morning tends to probe higher, too.

REMINDER: Market Wrap will begin early at 3:33pm ET, and it will include the Bigger Picture review since there is NO Saturday Review this weekend.

Holding the 2082.00 bias-down signal had put into play an offsetting test of the 2088.75 bias-up signal. And its test was likely to include a test of 2091.00. Ultimately 2192.25 was touched, but always overlapping 2091.00. And it was retraced back down to 2087.50.

But the vulnerability to reversing back down to and through the lows remains outstanding. The noon hour probed fresh highs, and the 2091.00 bias-up signal has triggered. Sellers are likely marginalized for the day.

Already backing off from testing the 2096.25 bias-up target would make the final hour vulnerable to reversing down. Again, reversing intraday trending on Fridays at all is very unusual, but there have been recent exceptions. And there’s still that attraction below…

Noon hour lows not recovering.

This morning’s noN-bias environment only ranged choppily, which is normal. But when the environment came within view of lapsing, the ranging persisted. And when the environment began lapsing, the range persisted. Extending the overnight recovery was becoming less and less likely.

In fact, a break lower into the noon hour fell 7 points to test the setup’s 1286.25 target. Isolating the probe to the noon hour could have been as bullish as the overnight dip’s isolation could have been. But neither seems to be. This afternoon’s 1289.75 bias-down signal triggered, and an attempt to invalidate it just failed.

Trending aggressively would be unusual ahead of tomorrow morning’s Employment Situation report. So, while a recovery today may not be likely, a bottom today is still possible. But bottoming at all isn’t required, as that needed at least to greet Payrolls already in rally mode.

Post-open reversal down hasn’t recovered, with FOMC looming.

This morning’s 2100.50 bias-down signal held its test to signal no-bias, putting into play an offsetting test of the 2109.50 bias-up signal. Attacking it to 2106.50 does not satisfy it.

It could have been rejected by breaking under 2100.50 by 10:30, but it was still being overlapped. Probed, but overlapped. Exiting the bias environment at 11:30 under the 2094.75 bias-down target could have invalidated it, too. But despite the bias environment developing under the opening range, it didn’t trend down to the bias-down target, let alone break it.

A test of this morning’s 2109.50 bias-up signal has become “unfinished business above” that requires eventual test.

Meanwhile, an opportunity to isolate the bias environment’s dip was not exploited. Exiting the noon hour and entering the afternoon’s bias environment above a prior high like 2102.50 may yet trap shorts. Otherwise, fresh lows at 2093.50 are likely, and a retest of yesterday’s 2091.00 low would likely break lower to 2082.00 or deeper.

The FOMC policy statement is a wild card. A negative reaction is likely since pessimism hasn’t been fulfilled or rejected — price simply remains depressed. The statement isn’t likely to raise rates, but it is likely to speak in hawkish tones. There’s reason for a knee-jerk reaction down, and little reason not to recover it.