Mid-day Update

Extending higher, but there might be a problem.

This morning’s rally extended to fulfill its next higher objective at  2071.00-2072.00 up to 2072.75. A shallow correction down to 2069.25 resolved up to fresh highs. The afternoon’s 2072.25 bias-up signal was still being overlapped at both 1:20 and 1:30 to trigger noN-bias.

Fresh highs are attacking 2076.00. The 2077.50 bias-up target doesn’t require being met, but it can be, and the next higher objective is 2080.50.

One thing I had not considered previously was a “session-long rally” setup. The setup triggers in rejection of the prior day’s closing dip, by gapping up above that prior afternoon’s bias environment high.

Yesterday afternoon’s high printed AFTER the bias environment began lapsing, but before the final hour’s entry. So, the setup isn’t optimal. But I’m wondering, since almost every timing window would probe the prior timing window’s high. And every timing window HAS probed the prior timing window’s high.

Usually, the noon hour fails to probe higher. But not today — now only the final 60-90 minutes could be the setup’s exception, and not probe higher. It wouldn’t necessarily reverse down, but the shallow late-morning pullback has me a little concerned. Especially if the bias environment were exited back under this morning’s 2072.75 high, be on guard for a reversal down.

No-bias doesn’t prevent late-rally, but leaves a path down.

The consequence to invalidating this morning’s bias-up signal was to probe a fresh extreme in the opposite direction. So, the 2050.50 opening print was probed to a fresh post-open low at 2048.25. Its attraction was another 3 ticks lower, so it was essentially neutralized.

The reward for absorbing the fresh low was to test 2056.00. That also became this afternoon’s bias-up signal. It was tested and held in time to trigger no-bias, and now the bias environment’s upper-end should be defined by 2056.00.

Hovering here would position the market strategically to resume Friday’s rally when the bias environment begins lapsing. Backing-and-filling could still recover and rally, but probably not from under 2051.00. Similarly, attacking post-open lows would position the market near this afternoon’s 2047.50 bias-down signal for a late-afternoon drop.

In either case, whether resolving up or down would be likely to extend in that direction through Wednesday morning. Rallying through today’s final hour would signal what Friday’s rally didn’t, that the ongoing decline did end at 2030.00. A new downleg today would instead resume the decline, which the limited bounce has maintained.

Post-open dip recovers to launch afternoon rally.

This morning could have staged a tremendous rally. Has it only been delayed to the afternoon?

Recovering the open’s tests of both bias-down parameters would have put into play offsetting tests of both bias-up parameters, essentially 2051.00 and 2056.00. But the open’s surge was retraced back down to the morning’s 2034.75 bias-down target. The bias environment exit had recovered back up to the morning’s 2041.00 bias-down signal as resistance.

The noon hour’s dip to 2037.25 was recovered to test the afternoon’s 2044.25 bias-up signal. It wasn’t triggered, but the afternoon’s 2050.50 bias-up target is being tested, anyway.

I had described during this pre-market Tour one bullish scenario that could avoid thoroughly testing the lower-end of early-April’s consolidation. Closing above 2056.00 or even above 2059.50 is basically the parameter, which is another 4-7 points higher.

The extra post-open dip did help to refuel buyers, and RSIs are overbought at the 2052.25 high, so a reaction down would likely recover — albeit from 2045.00 or 2042.50, and not necessarily today.

Rejection attempt fails, decline resumes.

Invalidating this morning’s bias-up had put into play tests of 2046.00 and 2042.00. The bias environment exit was firming from a test of 2046.00 when a Fed speaker’s comments made headlines, and triggered a spike up.

There was room to 2052.50 before that might actually resume the overnight rally effort. But 2052.50 was only touched and not triggered before reversing back down.

A sell signal triggered, as did this afternoon’s 2047.00 bias-down signal, and the 2042.00 bias-down target has been probed down to 2039.50.

Persistently oversold 3-minute RSI at the low suggests a bounce would be limited and fail. So does the low having stopped optimistically 3 ticks short of touching yesterday’s low.

Bouncing anyway has room up to 2044.00-2045.00 before suggesting a more substantial recovery underway. Otherwise, the trend remains down, next targeting 2034.75.

Look out below if that comfort level is finally reached.

Deep sea divers know the risks of descending too quickly too deeply. The inverse can be true, too. We last saw that on Monday, when the gap up pointed the session higher, but trending didn’t begin until the morning’s choppiness had ended.

Has this morning’s choppiness ended? The noon hour’s exit touched the 2041.00 low where the morning’s bias environment began lapsing. Retracing it proves the noon hour’s bounce was  “ineffectual optimism.” Both lows stopped 1 tick short of touching overnight lows, optimism that is potentially bearish from a contrarian perspective.

If tested, the 2049.75 bias-up signal should define the bias environment’s upper-end. Back above 2045.00 would signal some bounce is underway. But back under 2042.00 would signal a new downleg underway. Before 1:30 a break under 2042.00 would invalidate the afternoon’s no-bias signal. After 1:30 a break under 2042.00 would be no-bias trending requiring a retracement.

Sideways ranging until the bias environment begins lapsing would leave the final hour vulnerable to trending down sharply.