Mid-day Update

Probe of overnight lows is recovered.

The open’s test of the 2001.50 bias-up signal had put into play an offsetting test of the 1988.00 bias-down signal. The extra detour had created potential for that test also visiting 1985.50. Regardless of how deep, only after probing overnight lows would a rally be credible.

In fact, 1988.00 was tested. Quickly. It was too late to invalidate the bias, and too early for the bias to be lapsing already. And RSIs were oversold. So, a lower low tested 1985.50. The bias environment began lapsing back at 1988.00, with RSIs diverging positively.

A bounce there worked out better, for awhile, reaching 1998.50. But the 1995.50 bias-up signal wasn’t recovered through 1:20, as a reaction down attacked 1991.00.

Now we’re waiting for the 2:00 Beige Book release. It’s not an earth-moving report, but it’s still capable of inhibiting price action until it becomes history.

An objective above remains outstanding.

This morning’s recovery and reversal into positive territory came within 5 ticks of the 2016.00 objective. That’s not close enough to satisfy its sponsorship, which had held a test of the 1999.50 bias-down target and recovered 2004.25 through 10:15.

Despite having become entrenched with higher objectives in-play, buyers didn’t exploit any earlier opportunity to rest on their laurels. That chicken has finally come home to roost. Entering the noon hour at 2007.50 — a fibonacci 38.2% of the morning’s rally and also yesterday afternoon’s resistance — has broken lower to 2002.25.

There’s room down to 2000.00 before suggesting trending might be reversing down. Actually resuming the recovery won’t be signaled from under 2006.00-2007.00.

Fresh session lows are keeping alive volatility.

I had warned upon entering the noon hour that just ranging sideways in this pattern would quash any potential trending for the day. The noon hour did not maintain the range.

Probing fresh lows during the noon hour has extended down to satisfy the unfinished business below at this morning’s 1999.50 bias-down signal. It was just tested down to 1998.75.

Also being tested is this afternoon’s 1999.00 bias-down signal target. It’s not yet triggered exceeded with the bias timing window having arrived. No-bias A satisfied bias-down means the bias environment’s upper-end should be defined by its 2011.00 upper-end (bias-up signal) if tested. Back above 2001.75 would start to signal momentum is reversing up.

Upside attraction neutralized, FOMC catalyst awaited.

Holding the open’s test of this morning’s 1979.00 bias-down signal had put into play an offsetting test of the 1990.00 bias-up signal. Surging into and out of noon attacked 1990.00to within 3 ticks, neutralizing its attraction.

It didn’t take long for a reaction down to 1984.50. Partly from having satisfied buyers, and partly from posturing defensively ahead of this afternoon’s FOMC news. A 4-point bounce resolved down, too, this time attacking 1980.00. Perhaps a little more defensiveness with the 30-year auction coming.

Now another bounce is testing 1988.00. FOMC news is at the top of the hour. Having avoided positive territory for this long, a rally could extend more durably. Regardless, there is no requirement to react in either direction.

This morning has followed the entire day’s script.

Whatever’s left today, it seems that I won’t be available to observe and annotate it. Not in its entirety.

The offsetting test of this morning’s 1972.00 bias-down signal was probed at 10:30 while 1-minute RSI diverged positively, launching bounces to 1976.00 and 1977.00.

With the bias environment lapsing, back under 1974.00 was likely to resume the drop to retest the 1964.00 overnight low. And it was attacked to within 2 ticks before firming into the noon hour.

As today was expected to be all about backing-and-filling, we should remember that this action has room down to 1956.00. The overnight low is now being probed down to 1962.50, so backing-and-filling appears to have resumed.

It might seem like trending, being so far removed from yesterday’s highs and close, but it’s still within the context of a correction. The entire room down to 1956.00 need not be utilized. But it does need to hold, preferably intraday — and especially 1960.00 through the close to maintain the rally’s upward momentum and its potential back to last month’s FOMC high.