Mid-day Update

Morning rally still short of recovery.

The open’s dip to 2761.25 recovered back above 2767.00 too late for its sponsorship to be strong-handed. That didn’t prevent extending the bounce to test this morning’s 2777.50 bias-down signal by 2 ticks. The bias environment finished lapsing back down at its 2772.00 bias-down target.

Bouncing out of the noon hour has held a test of the 2776.75 bias-up signal to avoid triggering. Hovering here until the bias environment begins lapsing can resume the rally and trend higher into the close. Its likely objective would be to fill the gap back up to Friday’s 2784.50 close.

Back under 2773.00 at any time would start to signal another downleg underway. The next lower objective 2756.00, although testing it today would be difficult if not done aggressively. Overbought RSIs at this morning’s 2778.00 high would become another piece of unfinished business above.

WedEX influence should be obvious in this context.

If the WedEX’s bearish influence is valid, then it should begin being obvious now. Here, and now. The afternoon’s 2778.00 bias-up signal avoided triggering after invoking the grace period, so this should be the bias environment’s upper-end. And it’s already essentially the session’s upper-end.

So, selling should become obvious — here, and now — or at least upon dipping back under 2775.50 at any time this afternoon.

The setup’s downside need not be very productive. The window’s lower-end should be defined by 2769.50 if tested, or 2767.75. Any lower any later would be attracted to this morning’s oversold RSIs at 2765.50, whose retest all but ensures extending down to 2756.00.

Fresh session highs would be triggered above 2779.00, targeting 2783.00-2784.00, possibly 2788.00-2788.75. And fresh highs can’t be ruled out, since NDX has outperformed among the intraday index recoveries while the Dow has underperformed. These relationships are meaningful if they persist through the close.

The morning’s drop is being retraced.

The open fulfilled an Isolation setup that isolated the overnight probe under yesterday’s lows. The setup’s reward is to retrace back to yesterday’s highs, i.e. the origin of the leg containing the isolated probe. That’s the likely minimum upside objective. Meanwhile, it’s also likely that the morning be spent backing-and-filling.

Which it was.

Surging to fulfill this morning’s 2793.00 bias-up target held, and reversed down to the 2786.00 bias-up signal. Then lower, to 2781.00. That extra 5 points is similar to no-bias trending, and required being retraced up to 2786.00.

Which it was.

In fact, noon was testing 2788.75 by 1 point. The noon hour’s dip to 2784.50 was recovered back above 2787.00 to signal the rally has resumed. This afternoon’s 2791.50 bias-up signal is now being tested to within 2 ticks.

Being a no-bias environment, the bias-up signal should define the window’s upper-end if tested. The same rule applied this morning, but didn’t prevent a temporary probe. A temporary probe this afternoon is possible, too. And there’s still unfinished above at 2798.00, which is likely to be tested today or tomorrow morning so long as no sell signal gains traction.

Waiting for the FOMC news.

Opening at the morning’s 2792.50 bias-up signal eked higher through the morning to touch the 2796.00 overnight high. That’s an intraday test above prior intraday highs. Trending back down through the noon hour probed the open’s 2790.75 low by 3 ticks. That’s the minimum margin to make the fresh low non-arbitrary.

Rejection of a fresh high? Maybe. Maybe a premature warning. Maybe a false warning.

This morning’s bias-up signal triggered, and its 2798.00 bias-up target has become “unfinished business above.” A decline could form first, and be productive. That’s not common, but neither are FOMC policy statements. Regardless, an initially favorable knee-jerk reaction up that reverses back down is the most bearish scenario. Ultimately trending up above overnight highs is the most bullish.

Don’t forget that the policy statement is followed a half-hour later by the Fed Chair’s quarterly Q&A. This tends to be the month’s most opportunistic window for quick, big moves. Be careful if positioned already ahead of either news.

Brief fresh high only attacked yesterday’s.

This morning’s gap up back to late yesterday’s 2790.00 sell signal was retraced back down to its 2786.25 target. Natural support from the gap-fill back to yesterday’s close defined the bias environment’s lower-end, until the bias environment began lapsing.

Like yesterday, a rally leg has inserted itself between bias environments. Surging out of the morning’s bias environment peaked at 2794.00, attacking yesterday’s high to within 1 tick. The noon hour didn’t extend any further, and this afternoon’s bias-up signal failed to trigger.

A clean no-bias triggered. The bias environment should be defined by either 2787.00-2793.00 bias signal if tested.

Meanwhile, “unfinished business below” is at this morning’s 2782.00 bias-down signal. I’m otherwise a little suspicious about near-term weakness since yesterday’s high was only attacked and not pierced. But I’ll still take seriously a break lower coming out of the bias environment.