Mid-day Update

Testing big resistance, or breaking it?

This morning’s noN-bias environment wasn’t required either to extend or to reverse, so it did neither. Or both. Whatever it did was noise, lacking sponsorship that would have signaled its intent at either 10:15 or 10:30.

But the overnight rally had resumed when the bias environment began lapsing at 11:30. It was already firming when the bias environment lapsing lapsing came within view 10-15 minutes prior. A sell signal at 2784.25 was only touched but not triggered, and then became the launchpad to testing 2793.00 during the noon hour.

Probing this afternoon’s 2793.00 bias-up signal by 1 point at the noon hour’s 2794.00 high still didn’t trigger it. In fact, once again today has triggered nonN-bias. So, there’s no requirement to extend or to reverse, or not to.

In addition to being this morning’s bias-up target, and this afternoon’s bias-up signal, 2793.00 is a relevant objective of the rally. Last week’s pattern of reversing down from fresh highs is still influential, especially after having held another bias-up signal touch like last night. A dip back into this morning’s range at 2786.00 can’t be discounted. breaking under this morning’s range probably can’t be recovered.

A different market psyche than pre-open.

The open’s Isolation setup has been very productive. It got a choppy start, but 2767.00 held as support to launch the post-open rally. The isolation setup’s usual reward is to retrace the last downleg’s origin, which is yesterday’s ~2783.50 highs.

The morning’s bias setup has been influential, too, putting into play a test of its 2778.50 bias-up signal. The noon hour fulfilled it and probed it by almost 2 points. Its reaction down to 2777.00 is now trying to recover and resume the rally.

Meanwhile, this afternoon’s 2775.00 bias-up signal has triggered, targeting 2782.00. That’s difficult to invalidate. Especially with this being a Friday, unless the afternoon bias environment is exited back under a relevant low. Currently, that’s 2773.00-2775.00.

Selling becomes much more obvious.

Pullbacks can be constructive and healthy to an ongoing rally. They help to keep pessimism alive, which is bullish from a contrarian perspective. They help to trap shorts, which can fuel a recovery as they’re “squeezed” into covering. And they can neutralize attractions below, letting new rally legs extend unencumbered.

Pullbacks can also become trend reversals.

All of the benefits I listed for pullbacks can be bullish when they don’t damage the chart. Holding support, developing during irrelevant timing windows, artificial catalysts (e.g. knee-jerk reactions), leaving “unfinished business above,” etc.

Those features aren’t part of today’s pullback.

More so, today’s sellers are hardly bashful. Reactions down from fresh highs on all other days this week were limited to some prior support, or else recovered back above a relevant level before gaining traction. Today’s selling has twice triggered bias-down, and quickly fallen to its objective (this afternoon’s 2763.25 bias-down target was just met to within 3 ticks).

Recovering back into positive territory today is not impossible. In fact, a 7-point bounce is underway from attacking the target. But extending back into positive territory is unlikely, and so is confirming yesterday’s breakout. That wouldn’t be irrecoverable unless this afternoon includes another steep downleg.

Another last-minute bias signal reflects on sponsorship.

This morning’s 2743.75 bias-down signal wasn’t touched. Holding a test of the morning’s 2254.75 bias-up signal had put its test into play. That could have been invalidated by exiting the bias environment above the morning’s 2760.50 bias-up target. That’s rare even to be tested after having held the bias-up signal at 10:15. Which is why recovering it would have reflected more than noise.

It was noise. A lot of noise. Rallying this morning up to 2760.50 and no higher expended as much buying pressure as possible without gaining traction for the effort. So, 2743.75 becomes “unfinished business below.”

2760.50 is now this afternoon’s bias-up signal. It was triggered by a 2-tick margin. And that was late, after having invoked the grace period. Decisiveness isn’t very important for timely signals, but late signals like it. Still hovering at 2760.50 for this long only confirms  the late bias-up’s unreliability. Back under 2758.00 would start to signal momentum reversing down.

That said, STILL hovering at 2760.50 as the bias environment lapses would become more vulnerable to extending higher. Whether its inability to trigger was due to tepid sponsorship that’s losing steam, or due to timid sponsorship that would be bullish from a contrarian perspective, fresh highs would target 2765.00-2766.25. Then, the difference between tepid and timid would dictate the next leg’s direction.

Morning dip holds support.

noN-bias triggered this morning while a surge overlapped its 2751.00 bias-up signal. RSIs diverged negatively, and the surge reversed down as quickly, and more substantially. The morning’s bias environment low was 2739.00.

Exiting the bias environment under the lower-end of 2743.00-2747.00 would have been bearish. It was certainly probed, but not decisively when the bias environment had finished lapsing. And RSIs diverging positively at the low’s retest have bounced through the noon hour.

If you’re keeping track of the score, it’s Bulls 0, Bears 0. Actually, considering that each side made an effort, the score is more like Bulls <-1>, Bears <-1>.

Bouncing through the noon hour managed to touch this afternoon’s 2747.75 bias-up signal in time to invoke the grace period. Again. It held, triggering no-bias. Hovering there into the bias environment lapsing would be vulnerable — if not also likely — to launch an upleg into the close. And almost any afternoon upleg from here would likely be aggressive and substantial.

Otherwise, back under 2743.75 would start to signal momentum reversing down. And exiting the bias environment back under the 2743.00-2747.00 range could trend down through the close.