Mid-day Update

Productive trend, targets met, RSIs diverging… wait, what?

Consolidating through the bias environment’s end had formed a reliable accumulative pattern. It broke higher through 1910.00 to fulfill the 1913.00 objective. It extended higher through there to fulfill this afternoon’s 1919.75 bias-up target (by 1 tick).

The accumulative pattern’s corrective phase is biased upward. That reflects optimism, which tends to be sorely missed when new highs are probed. So far, that issue isn’t bothering the pattern’s breakout. But RSIs are deteriorating quickly.

Back under 1915.75 would start to signal momentum reversing down. Back under each prior would confirm. Exiting Friday afternoon’s bias environment by counter-trending can be pretty powerful before the close. But don’t get caught short of the bias environment exit is probing fresh highs.

Narrowing into late-afternoon.

This afternoon’s 1987.50 bias-up signal was probed during the noon hour up to 1992.00 resistance. Reacting down to 1878.00 avoided triggering bias-up. This is a no-bias environment.

A bounce back to 1987.50 has held. A brief reaction down is now trying recovering. Extending higher would be credible when the bias environment comes within view of lapsing at 2:15-2:20.

Exiting the bias environment in rally mode would target a probe above yesterday’s 1910.00 high to test 1913.00. That leg should be relentless, but not necessarily steep. Otherwise, not rallying out of the bias environment would be vulnerable to probing back into negative territory.

Surging into the noon hour ahead of the news.

When this morning’s bias environment was finally in view of lapsing, its 1987.50 bias-down signal finally stopped restraining a recovery. Its break extended up through prior highs to test 1910.00 into the noon hour.

A pullback to the 1900.00 prior highs has prevented triggering the 1905.50 bias-up signal. This is a no-bias environment. Exceeding 1905.50 through 1:30 would invalidate the no-bias. Probing above it later would be required to retrace.

Meanwhile, the FOMC policy statement is a half-hour away. Volatility is likely to explode in reaction. Testing 1913.00 before reversing down would be likelier than simply trending down, while trending up through 1913.00 to 1924.00 is possible.

Bias-up triggered by attack on prior highs.

Rallying this morning was consolidated at 1888.00-1894.00. Resuming the rally at noon extended to attack 1899.50.

A dip to 1894.00 recovered enough to trigger the 1895.50 bias-up signal. That was extended to retest 1899.50.

But rather than extend up to the 1902.00 bias-up target, the retest of 1899.50 reacted back down to the 1895.50 bias-up signal. That dip has extended more than 2 points under the 1894.00 interim low.

The 1902.00 bias-up target can still become “unfinished business above.” But that requires recovering the bias-up signal’s 1894.00 last relative low at the 2:30 bias environment exit.

Nothing precludes the bias environment exit from simply collapsing. But coming back all this way from overnight lows just to attack prior highs does seem suddenly pessimistic — which is potentially bullish from a contrarian perspective.

Morning’s dip recovered, but not reversed.

This morning’s 1885.75 bias-down target was met easily this morning, but not until the first hour had lapsed. A knee-jerk reaction to the Dallas Fed survey got out of the way, and fresh lows were soon probed down to 1881.75.

Recovering into and out of the noon hour up to 1895.50 failed to trigger the 1893.75 bias-up signal. Consolidating there formed a Head & Shoulders that is now breaking lower aggressively to 1887.50.

Back above 1891.50 would signal the dip had been absorbed and reversed, probably to probe above the 1904.00 overnight high. Failing to hold 1986.25 as support would suggest a retest underway of this morning’s lows.