Mid-day Update

Yellen reaction has largely retraced.

The open’s surge had consolidated to form an Ascending Triangle. Room for noise above it up to 2109.00 was touched twice before the noon hour. That firmed a Double Top from the Triangle’s breakout.

And that’s often bearish. The pattern normally resolves by trending back down in multiple legs that take 1-2 timing windows to complete. The decline tends to be recovered.

In fact, reacting down ahead of Yellen’s comments suddenly extended sharply in reaction to her slightly hawkish comments. A 4-1/2 point bounce attacked 2108.00 where another downleg was triggered targeting 2101.50 — and soon fulfilled down to 2099.50.

The downleg has been largely retraced almost as quickly as it had developed. That might be a little too optimistic, barely being 1-2 timing windows past the failed Ascending Triangle. Regardless, back above 2108.00 at any time would resume this morning’s rally, which is still targeting 2110.75. Meanwhile, a little more backing-and-filling can define the afternoon bias environment.

Filling the gap back to the close, feeling its resistance.

The initial post-open probe under overnight lows has recovered to fill the gap back to yesterday’s 2097.00 close. The 2099.00 bias-up signal wasn’t touched before triggering no-bias, so extending higher will need to be delayed until the bias environment begins lapsing at 2:30.

Overbought RSIs at the recovery high require its eventual retest. The balance of the bias environment may simply hover back down to 2095.00 awaiting that window for extending higher. A deeper reaction has room down to 2093.00 before suggesting anything more substantial underway.

Regardless, extending higher at all today would be vulnerable to extending higher aggressively. Sunday night’s 2103.75 “new Globex trend extreme” requires an eventual intraday retest, and the delay may be compensated by probing well above it. Still not rallying during the final hour would start to look toppy.

SPECIAL NOTE: I’m unavailable during today’s noon hour, and will return soon after… until the final hour.

Still touching the 2089.00 bias-down signal at the end of its grace period had triggered noN-bias, removing bias influences from the morning. Meanwhile, probing fresh highs and exiting the bias environment above 2089.00 goes a long way to marginalizing sellers.

The 2089.00 bias-down signal was recovered too late to require an offsetting test of the morning’s 2099.75 bias up signal. But recovering much more is hampered by timing — yesterday afternoon’s rally didn’t gain traction and today’s open didn’t gap up, so actually rallying above yesterday’s high would be suspicious until the afternoon bias environment begins lapsing. The impending 2:00pm Beige Book release might help to inhibit trending meanwhile.

Extending higher appropriately would target new highs, essentially 216.00-2018.00.That said, back under 2089.00 would target fresh session lows, unless the break were recovered before exiting the noon hour.

Testing supports, not gaining traction.

This morning’s plunge from testing the 2101.00 bias-up signal eventually extended down to test its 2096.25 bias-down signal. That would have been required by dipping just moments earlier to trigger no-bias. It was done anyway.

Delaying the break actually created more potential downside. No-bias would have required holding the bias-down signal. Instead, noN-bias removed any limitations to the morning’s range. And its break extended the drop to test the 2091.25 bias-down target, which would have been required if 2096.25 had broken lower earlier.

2091.25 had become this afternoon’s bias-down signal. Like this morning’s bias-down signal, it didn’t trigger. It could have triggered, unlike this morning’s signal.

So, are sellers finally done?

The bigger picture premise maintains the likelihood for resuming the rally. This morning’s detour was acceptable, but now risks upsetting the recovery’s slope by persisting into the afternoon. Being a no-bias environment, the 2097.00 bias-up signal should define the range’s upper-end until the bias environment begins lapsing at 2:30.

Fresh lows have room down to 2089.00 before signaling a much deeper pullback underway. New highs would remain likely, but the detour would be undefined.

Yellen about to appear.

This morning’s action adhered to the expected template. The immediately actionable parameter and subsequent signals have led to fresh highs.

Consequently, the template’s elements are moot, and so is the template.

• There only being an attraction above at 2094.75 had prohibited sell signals. Testing it up to 2095.50 has neutralized its attraction.
• The bias environment has lapsed, and its likelihood for narrow ranging is no longer influential.
• A surge to fresh highs immediately exploited the morning’s noN-bias environment lapsing. This injects a new degree of optimism ahead of Yellen.

Assuming current levels are maintained, Yellen is being greeted from a position of strength. This suggests some probe of higher highs, at some point — either a durable uptrend into the close, a momentary knee-jerk reaction up that resolves down, or a knee-jerk reaction down that resolves up.

Not likely is a knee-jerk reaction down that simply extends lower. At least, not likely without further optimism expressed ahead of the event, like already testing the 2099.00 area.