Mid-day Update

Morning bounce retraces fully.

Rallying out of the 2778.50 open got to 2784.00 where a reaction down was likely. Reactions down, plural, failed to reverse momentum down. Higher highs attacked 2788.00. Then breaks under 2784.00 probed under the open down to 2775.50.

Probes, plural, under the open. Which all held this afternoon’s 2776.50 bias-down signal to avoid triggering.

Coincidentally… unless Secretary Mnuchin is monitoring… a headline almost immediately followed, triggering a 5-point surge that extended to attack 2783.00. It was non-financial, and has now been retraced back down to 2776.50.

Was the headline responsible for not triggering bias-down? The headline’s reaction could have extended 5 ticks higher to this afternoon’s 2784.00 bias-up signal. Stopping short might reflect the ongoing attraction to retesting overnight lows. Whether to 2768.50 or 2761.00-2762.00, fresh post-open lows remain likely so long as 2784.00-2785.00 isn’t recovered through a relevant window.

REMINDER: I’M AWAY FROM THE SCREENS FOR THE FINAL HOUR… MARKET WRAP IS HELD ONE HOUR EARLY.

The open’s inability to trend one way or the other did hold tests of the 2789.75 bias-up signal. And eventually extending higher tested and held this morning’s 2797.50 bias-up target. Its first reaction down back to the 2791.50 open corrected into the noon hour. Another reaction down is attacking overnight lows down to 2788.50.

And there’s still no bullish reason to retest 2788.00, unless its test were rejected abruptly.

Meanwhile, this probe down to 2788.50 comes during the afternoon’s no-bias environment, under its 2790.75 bias-down signal, which is “no-bias trending.” It should be retraced into or after the bias environment begins lapsing. The 1:20 print at 2793.50 might be tested, too.

A bounce is now probing back above 2790.75 but must hold it through the bias environment starting to lapse, or else recover it again. Neither setup would dictate the ultimate resolution, whether to recover session highs, or else to reverse the trend down sharply.

Reaction from higher highs still a higher low.

Retracing the open’s surge from its 2779.00 high back down to 2772.75 held the 2772.50 bias-up target, renewing the bias-up signal. The 2777.25 renewed bias-up target was retested, on the way to fresh highs at 2785.50.

The noon hour’s retracement attacked 2779.00. Which is still a higher low — albeit slightly higher — in the ongoing series of higher highs and higher lows. And it’s only slightly above the open’s surge.

A fresh low would be credible for reversing momentum down, possibly reversing today’s trend back down to Friday’s “lower prior highs” at 2761.00-2762.00. Otherwise, back above 2784.00 would next target 2788.00, and possibly a reaction down, but probably only temporary and shallow.

Upside fulfilled. Can it be maintained? Can it extend?.

This morning’s 2749.00 bias-up target was met. And it was gradually exceeded. Then it was left behind in the dust when the bias environment began lapsing at 2758.00. The noon hour was entered at 2763.50. Potential to the low-2760s is fulfilled.

Attempts to extend higher have touched 2765.00. But this afternoon’s 2764.50 bias-up signal did not trigger. Back under 2760.00 could retrace to 2747.00 simply as noise.

Rallying out of the bias environment exit would be credible for resuming the rally, especially with this being a Friday. No matter how overly-extended today’s rally might seem, be careful underestimating the ability to drift higher through the close.

Retesting overnight highs.

This morning’s drop ultimately tested the 2718.00 bias-up signal. Being a bias-up environment, its test was required to define the window’s lower-end. Which it did, piercing it twice with errant ticks before bouncing.

And bouncing.

The noon hour’s entry had recovered this morning’s 2729.00 sell signal. The noon hour probed the 2732.75 opening high. And the noon hour’s exit probed the 2735.75 pre-open high. All of which was maintained for long enough to trigger this afternoon’s 2733.00 bias-up signal.

A reaction down to 2732.25 ahead of the 2:00 FOMC Minutes is trying to hold. Any lower would be credible for triggering at least a pullback. But a fresh high is otherwise likely at some point for rewarding the late-morning buyers.