Mid-day Update

Lower and lower lows open door to bigger bounce.

It’s not the size that matters. Big drops can bounce a little; little drops can bounce big. The difference is from where, and when. The open’s 25-point plunge to 2720.00 was retraced 38.2%, during a timing window. But the noon hour’s 2703.75 low exited the noon hour back above the 2710.25 bias-down signal. Its reaction could be pretty powerful if not rejected.

So far, its reaction hasn’t been rejected. Bias-down didn’t trigger, after invoking the grace period. And 2722.00 is already being attacked. There’s room for noise during the late no-bias environment back up to its 2725.25 bias-up signal.

Timing windows aside, the noon hour low has held the test of a multi-week trading range’s lower-end. Not reinstating the decline this afternoon could extend the bounce well into or even through the 2730’s. The drop would become a victim of its own success, having expended a lot of selling pressure and tested a lot of supports.

Oversold RSIs at the low printed during the noon hour and so don’t require a rest. Retesting the noon hour lows would have a different objective, and extend the trend instead of recover it.

Gap up recovered, not extended.

Buyers proved they bit off more than they could chew by testing too many prior highs at the open. But an attempt to invalidate the 2759.00 bias-up failed. And its 2765.50 bias-up target was retested. Friday morning’s bias signal persisted through the noon hour, and so did the 2759.00-2765.50 trading range.

Now the afternoon has triggered no-bias. Neither bias signal was even touched, and the trading range has only narrowed up to 2765.50. All of which is under the 2767.00 open.

This is not trending. If it were, then Friday afternoon would be extra-vulnerable and even likelier to extend it into the close. That’s still possible, and I would fade fresh session highs only carefully. Very carefully, because of the potential for extending higher.

Back under 2761.50 would start to signal momentum reversing down. That is also a vulnerability, but not a likelihood until actually probing the morning’s lows. Not yet probing the morning’s lows by the final hour’s entry would be difficult to resume the decline today.

MARKET WRAP WILL BE HELD EARLY TODAY AT 3:03 PM ET

Relevant level holds a retest and a re-retest.

The Globex exit’s setup already told us at the open that this morning would behave bearishly. It collapsed through the first hour attacking 2751.00, then bounced into noon to its 2763.50 corrective target. The bounce was contained by a 61.8% retracement back to session highs, still in the orbit of session lows. That’s a bearish morning.

The same setup could also extend through tomorrow morning. We want to be aware of that if it’s the market’s intent. We also want to know if the market intends to hold its multiple intraday retests of 2756.00, because then the correction may have ended.

This afternoon’s bias-down 2751.50 target was just met to within 2-3 ticks, and its 2757.50 bias-down signal failed to trigger. It failed to trigger after invoking the grace period, a grace period invoked by a signal 1-minute surge yet to be improved, and 2757.50 is still being tested. So, be suspicious — sellers aren’t marginalized. Failing to exploit a recovery from both bias-down parameters would be as bearish as it could have been bullish.

Detour keeps fighting back.

Holding a test of this morning’s 2773.50 bias-up signal put into play an offsetting test of this morning’s 2763.00 bias-down signal. The reaction down got to natural support at 2767.00 which held. It held, and it firmed into the bias environment exit.

Then the bounce extended, into and through the noon hour. The gap back up to Monday’s 2778.00 cash session close was filled. Natural resistance there has reacted down to 2774.00. Which is also support, being this afternoon’s bias-up signal. And bias-up triggered at 1:20.

But this afternoon’s bias-up hasn’t yet been productive since triggering. In contrast, this morning’s bias signal produced fresh lows after triggering. Without probing a fresh high, this afternoon’s bias-up signal can be invalidated by exiting the bias environment under its 2767.75 bias-down signal.

Meanwhile, back above 2775.75 would resume the upside momentum, its objective being this afternoon’s 2779.75 bias-up target. This morning’s 2763.00 bias objective is now “unfinished business below.” Usually each session is a bout between two boxers. But the volatility of today’s widely disparate opposing targets objectives suggests that two gangs are going at it — and they’re just getting started.

Choppy morning struggles to hold above critical support.

The open’s gap down surged back up. Its reaction probed fresh post-open lows down to 2735.75, and that was recovered to test yesterday’s pre-open “higher prior lows” at 2764.00. That’s just short of 2767.00 whose recovery through the close could reverse the trend up. That was also by noon, leaving plenty of time for another downdraft.

In fact, another downdraft has attacked 2754.00 while triggering a late bias-down. That has become suspicious, itself, now that its reaction up is testing 2762.00. The bias-down environment’s upper-end should be defined by its 2758.50 bias-down signal if tested, and it’s being tested. Being a late bias signal helps price action to ignore it.

Exiting the bias environment above its 2767.00 bias-down signal would invalidate the late bias-down. And it would likely squeeze higher through tomorrow’s open. Otherwise, back under 2757.50 would resume the decline.