Mid-day Update

Morning plunge remains contained within prior range.

Plunging from 1988.00 down to 1978.00 in 5-7 minutes was the character of price action expected from the topping template. That happened this morning after the EIA report on Crude Oil triggered a knee-jerk reaction up to 1991.00.

Another characteristic of topping? Extending down. That did not happen this morning. Like the bounce above 1986.00 to 1991.00, the reaction down to 1978.00 was contained entirely within yesterday’s late-afternoon range.

But there’s nothing inherently bullish about that. Strong-handed buyers would have exited the bias environment probing fresh highs. Strong-handed buyers may yet exit the noon hour probing fresh highs, but their timing wouldn’t be optimal. Regardless, probing fresh highs during the noon hour would be weak-handed and doomed to failure like this morning’s 5-point probe above 1986.00.

Meanwhile, an offsetting test of this morning’s 1977.00 bias-down signal has become “unfinished business below.” It must be tested eventually. Any interim rally would be suspicious. And testing 1977.00 could resume the character of selling expected by the topping template.

Still monitoring for capitulative downleg.

The reaction up from this morning’s 1977.50 low has touched 1993.00. That’s the highest post-open print and its still 6 points into negative territory.

Anything higher would suddenly become much likelier to probe fresh highs, like 2009.00.

Otherwise, this now being Tuesday afternoon, a downleg can now be obvious. If not today, then tomorrow morning.

Topping pattern’s restraints are holding.

A shallow gap down that recovers back into positive territory (however high or shallow) that closes slightly positive. That’s the basic form for today’s session that would maintain the potential for topping.

Gapping down to test this morning’s 1986.00 bias-down target avoided triggering the 1992.50 bias-down signal. That has recovered into positive territory to within 1 tick of the afternoon’s 2004.75 bias-up signal.

And now that has reacted down to unchanged at 2005.00-2007.50 (Friday’s cash session and futures closes).

Closing around here would qualify as a slightly higher close, and maintain the potential topping pattern. That’s more than 2 hours away, so another bounce wouldn’t be surprising. Or a deeper dip that barely recovers.

Also possible is a close under 1984.50 pre-open low. While not a positive close, it would form a bearish Pivot Reversal bar — that could serve by proxy, so long as the lower close weren’t so much lower as to borrow future selling pressure.

TODAY’S MARKET WRAP WILL BE HELD ONE HOUR EARLY AT 3:03 PM ET, AND I WILL BE AWAY FROM THE SCREENS THROUGH THE SESSION’S LAST HOUR.

The noon hour had tested this afternoon’s 2002.50 bias-up signal, but it wasn’t triggered. That hasn’t prevented probing above it to 2007.50 in what is called “no-bias trending.” The last time we saw that was way, way back this morning.

No bias-trending requires retracing at least to the bias signal that should have defined the no-bias range. This morning’s is 1993.75, and it still requires retest. Meanwhile, 2992.50 is being tested as the bias environment lapse comes within view.

The noon hour’s pattern suggests a fresh session high would print. It also suggests the higher would be vulnerable to reversing down. Exiting the bias environment under prior highs would be bearish.

Otherwise, not reversing down obviously by the time the final hour begins, would remain vulnerable to extending higher into the close.

Still under pressure without sponsorship.

PROGRAMMING NOTE: Some instability in the chaRTroom caused some attendees to lose connections. Please let me know if you were affected to help isolate the issue’s cause… thank you.

This morning’s no-bias environment triggered without touching either bias signal. If touched later, either bias signal would be required to define that end of the range.

Bouncing to within 2 ticks of the 1977.00 bias-up signal was reversed to within 1 tick of the 1966.00 bias-down signal. Recovering that to a fresh high consolidated around the 1977.00 bias-up signal up to 1978.75.

Now the no-bias environment has lapsed. The bias signals need not define the range. But there’s still no requirement to trend beyond either end of the 1966.00–1977.00 range.

Back under 1973.75 (being tested now) would target a retest of this morning’s lows, and back above 1977.00 could extend to retest overnight highs. Still, neither resolution is required, and trending again today could be difficult until after the afternoon bias environment.