Mid-day Update

Fresh lows into the afternoon.

Support under this morning’s renewed 2781.00 bias-down target was chipped away to enter the noon hour at 2722.50. A slightly lower low and a bounce back up to 2781.00 didn’t ended the decline. Being a Friday, the morning’s bias-down tends to persist through the noon hour anyway.

Now this afternoon has triggered a noN-bias environment. The 2773.50 bias-down signal isn’t required to define the window’s low — in fact, fresh lows are already testing 2770.00. And no requirement to test the 2764.75 bias-down target, although that’s still likely since 2781.00 didn’t hold.

Back above 2778.00 would start to signal a bigger bounce underway, regardless of the outstanding attraction below. And nothing about today’s decline is (yet) suggesting the two-week old correction has ended.

Still trading exclusively in negative territory.

Today’s gap down to 2804.50 bounced to 2813.25, but still triggered the 2807.75 bias-down signal. Its 2800.75 bias-down target remains outstanding.

Now the noon hour has touched this afternoon’s 2815.25 bias-up signal, which held. It didn’t trigger, despite reversing down to the 2806.00 bias-down signal in time to invoke the grace period. But it was still being overlapped — by a probe well under it to 2804.00 — to trigger noN-bias. The 2806.00 bias-down signal need not define the window’s lower-end.

The 2:00 FOMC policy statement is a catalyst for volatility. The two likeliest templates for a knee-jerk reaction:

• Down to satisfy the 2800.75 “unfinished business” below and become vulnerable to rallying back up to either 2811.00 or else to the 2818.00 overnight highs.
• Up to recover 2811.00 or 2818.00 and either extend higher through Friday morning, or else collapse into the close.

Meanwhile, there’s no requirement to trend in either direction, beyond the overnight range. But for this afternoon’s news event, it’s almost getting a little late for a reversal down to be credible.

Open’s wide range resolves up.

Two tests of the 2787.00 area — three, including the pre-open high — resolved up to 2793.00. Consolidating back down to the 2787.00 area resolved up through its 2793.00 resistance, extending to 2801.25.

This afternoon’s 2795.75 bias-up signal has triggered, putting into play 2802.00, now being tested to within 3 ticks. More so, a correction of the entire October downleg is no in-play. Its minimum objective is 2814.50, and then potentially 2844.00 or even 2896.00.

There’s always a path down, however unlikely. Its minimum requirement is to close back under the 2787.00 area, and then to extend down sharply without delay. Almost any other shallower or less aggressive weakness is likely to maintain the rally.

Hovering at highs.

The open’s surge stopped immediately upon filling the gap back to Friday’s 2751.25 gap up. Just touching a filled gap isn’t ever likely to launch a reversal. And that undermined its reaction down to 2742.00 from extending. Which it didn’t.

The noon hour’s probe up to 2753.25 satisfies the room for noise above 2751.25, and touching it did react down. But that hasn’t launched a reversal, either. Not for lack of trying — the afternoon’s 2750.50 bias-up signal held its test to trigger late no-bias.

Exiting the bias environment back above 2752.50 would start to signal the rally is extending. This afternoon’s 2757.50 bias-up target would still be a likely attraction, and any higher would be difficult to reverse down today. Otherwise, back under 2748.00 and 2743.00 would signal and confirm a reversal is underway already.

PROGRAMMING NOTE: Market Wrap will begin early at 3:15 ET.

The overnight rally above 2720.00 to 2729.50 had been entirely retraced, and then recovered into and out of the open. Its 2733.25 post-open peak was reversed sharply down to 2717.00. Bias-up was rejected, triggering no-bias, putting into play an offsetting test of the bias-up signal.

And that was just the first hour.

The next half-hour rallied. Also sharply, and also entirely retracing a fresh high at 2734.25. It was too late to trigger bias-up, and too late for recovering the bias-up signal to invalidate the no-bias. The morning’s offsetting test of its 2709.50 bias-down signal has become “unfinished business.”

But that was 2-1/2 hours ago.

The market has been ranging choppily sideways back down to 2724.00. Neither of this afternoon’s bias signals was tested or even attacked. There’s room up to this afternoon’s 2737.75 bias-up signal, or down to its 2720.75 bias-down signal… until the bias environment begins lapsing.