Mid-day Update

Testing the next lower support.

When yesterday’s dip to last week’s “lower prior highs” at 2140.50 was recovered above yesterday’s opening high — despite being done overnight — there became no bullish reason to revisit last week’s lower prior highs. The resolution would be to probe lower.

Today’s retest of 2140.50 could have escaped this consequence if its test were isolated to the open. But it wasn’t. Now 2135.50 is being tested. That’s the next “lower prior high,” and the next opportunity to launch a rally leg.

Holding the open’s test of its bias-down signal did put into play an offsetting test of its 2148.00 bias-up signal. Exiting the bias environment under the bias-down target would have invalidated the objective. Instead, it becomes “unfinished business above” that requires an eventual retest.

Probing under this morning’s 2141.25 bias-down signal before the bias environment begins lapsing is called “no-bias trending.” It requires being retraced at least to the bias-up signal, and often also visits the 10:15 print, which was 2144.00.

Opportunity to rally from lower prior highs. And unfinished business above, two of them. That’s a lot of bullish potential. And it could be realized today.

Meanwhile, isolating the test of 2150.00 to overnight price action has created significant downside vulnerabilities. Exiting the noon hour in decline or triggering this afternoon’s 2137.50 bias-down signal could point down into late-afternoon.

Pullback sufficient, so it had better end.

The noon hour’s 2140.50 low tested last week’s “lower prior highs.” That’s a natural reaction following a gap up, regardless of the eventual resolution.

A bearish scenario would extend down, whether soon or after failed bounces had chipped away at support. A bullish scenario’s next leg would rally to fresh highs above the open’s 2149.00 peak. Delaying the bullish scenario’s recovery would not take long, and would not return to the lower prior highs.

A bullish resolution remains likely since the opening action created an anchor to enable recovering from a correction. And the correction’s objective has been tested.

This afternoon’s 2141.25 bias-down signal held its test to avoid triggering. There’s room up to the 2147.50 bias-up signal during the no-bias environment. There’s no limitation when the bias environment begins lapsing, but at least 2150.00 should be tested.

Fresh lows wouldn’t necessarily be bearish. Fresh lows AFTER  a bounce would not be bullish. But digging a little deeper before trying to recover could still be part of the correction.

Back up to unchanged.

Despite ultimately touching 2126.75, a bounce or a recovery was required. Breaking under the 2133.00 bias-down signal at 10:30 was still overlapping 2133.00, which required returning to it at some point — regardless of the resolution. The bias environment started lapsing back at 2133.00.

Surging into the noon hour has extended to within 1 point of the plunge’s 2141.25 origin. And now the afternoon’s 2136.50 bias-up signal has triggered. Back above 2139.00 would signal the rally had resumed.

Meanwhile, the market is still only unchanged at best, and otherwise in negative territory. Two big recoveries from lower and lower probes under yesterday’s low is potentially bullish. That potential is stored energy and otherwise useless if not triggered. Entering positive territory should be that trigger. Meanwhile, there’s room for a little deeper “backing and filling.”

Buyers less patient.

Yesterday’s post-open dip was deep and recovered entirely. Almost entirely. And then a deeper dip developed overnight.

Recovering that deeper dip into the open didn’t prevent another post-open dip. But it was much shallower than yesterday. And it was recovered entirely. Quickly. And well beyond its origin.

Also, rather than stop pessimistically short of prior highs like yesterday, today’s recovery has extended several points above yesterday’s highs. It’s still a little too shallow to view from a contrarian perspective. But excessive optimism isn’t the only risk, and RSIs are not getting overbought anymore.

This is a late bias-up environment triggered above 2140.50, and it has already produced fresh highs at 2142.25. Reversing down prematurely wouldn’t be unusual, only unlikely. But there’s room down to 2139.00 before suggesting momentum is reversing down.

Volatile session now catching its breath.

18 points were gained from yesterday’s cash session close to the overnight high. More than half of it was retraced by the open’s drop to yesterday morning’s “lower prior highs” at 2129.00. And almost all of that drop has been recovered.

Rallying back to 2138.50 at noon hovered, and dipped, while still trading just a two points lower two hour later. Stopping short of the 2139.00 high is pessimism. Not yet reversing down is “ineffectual pessimism.” And pessimism is potentially bullish from a contrarian perspective.

The afternoon’s no-bias environment triggered without even touching either signal. Sponsorship is not involved. Narrow and/or directionless ranging is appropriate for this signal. Soon the no-bias environment will begin lapsing.

Back above 2137.50 would target slightly higher highs around 2141.50. There is potential to extend even higher, but also vulnerability to reversing down sharply. Just dropping back under 2135.00 would suggest a drop is developing anyway.