Mid-day Update

More upside objectives in-play.

Finally rallying out of the open’s 2828.50-2831.00 range attacked the 2836.00 overnight high to within 2-3 ticks. Bias-up triggered late, putting into play 2837.50. And then price dipped back down to 2828.50.

Sellers had all morning to actually reverse price down, if they were able. But they couldn’t and didn’t. Their break under 2831.00 didn’t extend beyond its room for noise below. The only attraction is higher, so buyers get a benefit of the doubt.

In fact, rallying again since noon has attacked the 2836.00 overnight high to within 1 tick. That triggered another bias-up, putting into play 2838.50.

Back under 2831.00 would still be credible for producing a detour down. But a more credible sell signal will be available after upside objectives are met.

REMINDER: I’m away from the screens for today’s last half-hour. Market Wrap will be held a half-hour early at 3:03 ET.

Having rejected tests of both bias-down parameters this morning, offsetting tests of both bias-up parameters were put into play. Triggering late — by the grace period — made the upside objectives only likely instead of required. But extending to fresh highs through 10:30 had at least confirmed the no-bias.

Reacting down along the way from 2812.50 had potential to 2801.50. Stopping short at 2804.50 and still triggering another buy signal as the bias environment began lapsing made the offsetting tests likely today. And now they’ve been probed up to 2828.50.

The overnight low was 2891.00.

That’s a lot of buying pressure. And a lot of optimism, especially ahead of tomorrow morning’s pre-open Employment Situation report. It follows a lot of selling and pessimism, so maybe buyers aren’t relatively extended. And they’ve overcome the 2815.50-2822.00 targets. Currently, this afternoon’s 2822.00 bias-up target was exceeded in time to renew the bias-up signal. It’s next target is 2828.50-2831.00, the lower-end now being touched.

Today is not a “session-long rally” setup, so there’s no assurance of extending higher. But even if we knew with 100% certainty that today’s high has printed, there’s also no assurance of reversing down, instead of simply drifting sideways through the close.

Have sellers discounted enough of a reaction?

No-bias triggered cleanly this morning. Attacking 2826.00 was required to retrace at least the 2823.25 bias-up signal. Anyway, its difficult attracting sponsorship ahead of FOMC policy statements. And the open’s congestion was already likely to attract price back down.

The reversal targeted 2815.00. It has extended down to 2808.00 at the noon hour’s low. Also probably not strong-handed sponsorship, but defensive posturing.

So, defensively postured enough? Has the drop discounted the potentially negative news, at least to soften its knee-jerk reaction and help 2804.50 hold as support? The 60-90 seconds following the news could be excused for a probe under 2801.50. An initially favorable reaction would itself need to be maintained, or else be vulnerable to testing 2804.50.

Pessimism is alive and well.

Retesting this morning’s 2839.00 GDP reaction didn’t hold. Bias-down didn’t trigger, but its 2829.50 bias-down target was attacked to within 2-3 ticks at the bias environment low. The noon hour steepened the drop and extended it much, much more sharply.

Breaking under this afternoon’s 2822.00 bias-down target renewed the bias-down signal, next targeting “unfinished business below” at 2813.75. It was tested down to 2808.75.

Now a bounce is testing 2817.00. But the trend hasn’t reversed up. Exiting the bias environment back above 2818.00 would help to signal a short-squeeze underway, with potential to 2829.50. Otherwise, back under 2811.00 would at least probe fresh lows, if not resume the decline next targeting 2801.50.

Unfinished business above.

A funny thing happened on the way to fulfilling this morning’s 2848.75 bias objective. The noon hour was entered by a surge to 2846.50 when a NAFTA headline triggered a quick reaction down under 2842.00. The reversal’s potential down to 2836.50 was fulfilled to within 1 tick.

The morning’s bias objective was formed by barely avoiding a bias-down. Now the afternoon’s 2840.00 bias-down signal has narrowly avoided triggering. Price action has been fluctuating 2 points around either way. Back above 2841.00 should launch a retest of the highs, and presumably also fulfill 2848.75.

Otherwise, extending down would be “no-bias trending” that requires being retraced. But extending down could test 2829.50 before basing, and potentially test 2818.00. Regardless, the rally is has become entrenched enough that any downside should be only temporary.