Mid-day Update

Bouncing back to the open.

10:15’s 2050.25 low was finally broken by more than an errant tick or two. That ended the potential for compartmentalizing this morning’s break under 2059.50. Meanwhile, that break bottomed at 11:30 at 2048.00. So, its sponsorship is similarly vulnerable to being compartmentalized.

This afternoon’s 2057.00 bias-up signal is a function of that last downleg. Recovering it, and its room for noise up to 2057.00, has now triggered bias-up. We assume the bias-up bounce is only a correction, which was dictated by this morning’s bias environment exit not recovering 2059.50.

Speaking of which, 2059.50 is now being probed by 1 point. It can be probed up to Friday afternoon’s high while being only noise. That’s essentially this afternoon’s 2063.50 bias-up target.

Exiting the afternoon bias environment any higher would be difficult to co-exist with the morning’s probe under 2056.00. It would require that Wednesday’s open gap significantly to reject one, or the other. For now, invalidating the current bias-up signal requires exiting this afternoon’s bias environment back under its 2050.50 bias-down signal.

So many sizable swings in a singular pattern.

This morning’s late bias-up signal eventually produced a fresh high after 10:30. This makes its 2073.00 target very difficult to avoid testing.

Meanwhile, the swings within this morning’s range were not impressive for their size so much as their frequency. So many sizable swings without breaking the range is very unusual. There is no shortage of opinion, and it is widely varied.

Perhaps if the swings weren’t responding to the singular pattern’s calculable inflection points. Then, the ongoing indecision could be dismissed as a market trying to establish a resolution. But gapping up from Friday’s range had done that already, along with triggering bias-up.

Regardless, this afternoon’s 2068.00 bias-up signal is now triggering. Firming into the noon hour’s exit has surged to test 2071.25. Finally exploiting the setup doesn’t improve its productivity. So extending the recovery depends on exceeding 2073.00 through a relevant window.

Bounce is recovering resistance.

The first step to forming a bottom is to stop falling. The second step is to consolidate. Only then can an upleg launch. And without an upleg, the consolidation can still only a continuation pattern.

So, it’s interesting that this morning’s drop to 2046.00 has crept up gradually to test what had been 2056.00 lower prior highs. And it’s interesting that the 2055.25 bias-up signal is now being tested (invoking the grace period).

Triggering bias-up would suggest the pullback had ended and that momentum is reversing up. No upside potential can be highly confident in negative territory. The decline would resume back under 2053.25.

Two landmarks above are 2061.00 and 2063.50, whose recoveries coming out of the bias environment would help to confirm momentum still reversing up. Otherwise, there’s no bullish reason to retest the lows, whose RSIs are not oversold.

And positive territory probed.

Holding a test of this morning’s 2083.75 bias-down signal through 10:15 put into play an offsetting test of the 2092.75 bias-up signal. This objective has been met.

Yesterday afternoon’s rally had gained traction for its effort, making this morning likely to trend up. That objective has been fulfilled.

An offsetting test of this morning’s 2099.00 bias-up target isn’t required. Although the 2076.00 bias-down target was tested thoroughly overnight, it was tested only overnight.

But the bias environment is now lapsing, so its upper-end need not be defined by the bias-up signal. And there’s no bearish reason to have retraced back to yesterday’s highs. None of which prevents a reaction down, but any reaction down should be only temporary.

Is FOMC news the trigger?

Trending isn’t likely ahead of  the 2:00pm FOMC policy statement. That didn’t prevent bouncing more than 9 points into the noon hour’s 2085.75 high. This morning’s 2075.50 bias-down target was met to within 3 ticks, and the bias environment exit recovered its 2081.00 bias-down signal.

The only unfinished business below is oversold RSIs at 2076.25. Its test would be targeted under 2079.00. Greeting the FOMC news there wouldn’t be healthy. Fresh lows at 2067.00-2069.00 would be targeted, and potentially lower if not recovered quickly.

Back above 2083.75-2085.00 would greet the FOMC news from a position of strength, allowing a favorable reaction to expend less energy just to retrace resistance, leaving more energy to rally. Fresh highs at 2110.00 remain likely.

P.S. Somehow the last post’s chart was incorrect. Click here for the correct chart.