Mid-day Update

Early upside momentum fails.

Holding a test of this morning’s 2721.50 bias-down signal had put into play an offsetting test of the 2730.75 bias-up signal. There was really only one attempt, and got to only 2727.00. The objective becomes “unfinished business above.”

Now the Friday afternoon crowd is in charge.

The morning’s consolidating was supported by its 2721.50 bias-down signal until the bias environment had fully lapsed at noon. And then the landscape changed. A drop to the afternoon’s 2718.00 bias-down signal held through the 1:20 bias timing window, invoking the grace period. The 1:30 bar was still overlapping it to trigger noN-bias. The same bar was also probing under the morning’s 2717.50 lows.

noN-bias doesn’t require testing the 2712.00 bias-down target, but it can. I’m treating it that way unless the bias environment is exited back above its 2718.00 bias-down signal. An attempt to trend down already failed this morning, which often defines a defensible low, so any recovery could be substantial.

Non-market headline’s knee-jerk reaction retraced almost entirely.

This morning’s N. Korea meeting news was relevant, but it wasn’t market related. It was very productive, too, reversing from 2730.50 down to 2705.75. That took 90 minutes, while the more immediate consequence tested 2714.00. I suspect that the extension was sponsored by the same patient sellers that were waiting for that obligatory probe above yesterday’s highs.

In other words, that’s a lot of selling pressure.

The question I posed earlier was whether attracting those patient sellers would produce a break under relevant support. Which they didn’t. The bias environment began lapsing several points above its 2713.00 bias-down target, and at its 2720.75 bias-down signal.

In other words, that’s a lot of weak-handed selling pressure.

Already, rallying through the noon hour has retraced almost all of the non-market related headline’s reaction. Hovering at or under 2728.25 has triggered this afternoon’s 2725.25 bias-up signal. Extending higher isn’t much likelier than backing-and-filling. But now another sell-off has been retraced, which could inhibit sellers into the weekend if Europe’s bearish attitude is kept in check.

Early swings narrow into and out of the lunch hour.

The open’s 10-11 point surge up to natural resistance near yesterday’s 2721.50 low was reversed down to 2708.50. A lot of that was recovered up to 2720.00 through the bias environment lapsing. Another 2-3 swings have narrowed around 2715.00, triggering the afternoon’s no-bias.

FOMC Minutes is due at the top of the hour.

Not yet extending the rally when the bias environment lapses might still attempt it, but not very credibly. Simply resuming the rally would be more credible for resuming the decline — and the most credible alternative to not improving the recovery.

Temporary probe of fresh highs is retraced, not rejected.

Extending higher this morning depended entirely on attracting post-open reinforcements to what was very likely going to probe overnight highs. In fact, a quick surge touched this morning’s 2741.50 bias-up target, and then collapsed.

Well, collapsed to a relative degree, relative to an otherwise narrow range. The bias environment low attacked, touched and pierced 2733.00. But momentum never reversed down.

Now an interim bounce up to 2739.00 has been reversed back down to the morning’s lows. The 2730.50 bias-down signal could be tested during this afternoon’s no-bias environment, but it’s not required.

This morning did leave “unfinished business below” at its 2727.25 bias-down signal. The late no-bias had also rejected a test of the bias-up target, so an offsetting test of the morning’s 2721.50 bias-down target, so an attraction to it is in-play, albeit not required.

Back above 2737.50 would start to signal momentum reversing up. That’s still a possibility. Except for today’s intraday lower and lower highs, that’s a likelihood. Especially until sellers are more productive than just retracing bounces back down to unchanged —  and so long as the 2732.00 upper-end (now “lower prior high) of last Monday afternoon’s range holds as support.

Holding resistance, if not actually sticking to it.

This afternoon’s 2534.00 bias-up signal was overlapped at 1:20 to invoke the grace period, and still being overlapped at 1:30 to avoid triggering. This is a noN-bias environment. Not a bias-up with a higher target in-play, and not a no-bias requiring the bias-up signal to hold. Often a noN-bias simply ranges sideways, but the window is free to roam.

Shouldn’t it? This morning’s action was non-committal, but not for lack of trying. It swung wider than the open’s range, which was already wide. The 2737.00 9:45 was eventually probed up to 2739.25. Its reaction down eventually plunged to 2725.25. And now that has been retraced up to 2736.25.

Should it be down? If there is trending during this noN-bias environment, no more downside is required. This morning’s high held the earlier peak’s test to form a Double Top, which was the last opportunity for fulfilling the bearish WedEX. Like hitting a one-outer at the Texas Hold’em World Series of Poker, the bias environment exit plunged to fresh post-open lows at 2725.25. Now the WedEX influence is moot.

Back under 2732.75 would start to signal momentum reversing down — probably for a fresh session low, perhaps to fill the gap back to Friday’s 2713.00 close. Rallying instead has no restraint, and could end the session above 2740.00.