Mid-day Update

Late bias-up keeps momentum intact.

Fresh highs up to 2864.50 during the morning’s bias environment had confirmed upside momentum remained intact. The confirmation came a little early, and could have been rejected back under 2859.00 (this morning’s Dry Cleaners signal level). But the pullback limit was only attacked before recovering through the noon hour, reflecting weak-handed sellers.

The noon hour’s exit probed the 2866.00 two-week old high by 2 ticks, fulfilling the likely structural reward for gapping up. The high gap’s 2855.00 retracement, or the 2861.00-2863.00 gaps could have neutralized the attraction. But their reactions down haven’t attracted reinforcements, so upside momentum remains intact.

Now the afternoon’s 2864.00 bias-up has triggered, late. It could have been rejected back under 2863.25. But the reversal signal was only touched, and the signal was recovered in time to trigger. The high’s room for noise up to 2869.00 — which is also this afternoon’s bias-up target — remains in-play.

Having fulfilled the structural reward for gapping up, reversing down would leave no “unfinished business” to help recover. Meanwhile, the recent intraday distributive pattern keeps today’s rally vulnerable. And I’m not at all biased by really wanting to label my next post “April Fool’s”.

Gap up forms momentum peak.

Last night’s Globex had soon surged to a fresh high at 2829.00. But for Brexit, the balance of the night was tracking a flat-to-lower open. Thanks Brexit, this morning’s open up to 2837.50 inhibited sellers and the balance of the morning was flat-to-lower, albeit aggressively.

But even that hasn’t reversed the trend down. This morning’s bias-up environment fell 14 points from the open’s high, only to attack its 2823.00 bias-up signal. A lot of selling pressure expended without even beginning to try gaining traction.

Bouncing back toward the open had begun ranging narrowly sideways by noon. The afternoon’s no-bias environment is resisted by its 2833.00 bias-up signal. Breaking through it as the bias environment begins lapsing could trend up to fresh highs through the close. Trending down into the weekend would all but require exiting the bias environment under 2827.75 and 2825.25.

Trending attempts scurry back to unchanged.

The open’s surge above overnight highs came too late to be credible. It quickly peaked at 2820.25 and reversed down sharply 5 points where natural support at unchanged held. More weak-handed buying probed higher to 2824.25, fulfilling this morning’s bias-up target, and the buying pressure that created it.

A more consequential reversal collapsed down to 2802.50. That was well under the morning’s 2816.75 bias-up signal, during a bias-up environment. And that’s a reflection of sellers become less patient — like mid-morning yesterday’s collapse.

Now the noon hour and bias environment have bounced back up to this morning’s 2816.75 bias-up signal, retracing its premature break. The attraction above is neutralized, and the weekend is fast-approaching. Impatient sellers would be entirely credible for triggering a new break lower, especially so long as the afternoon bounce doesn’t recover 2818.00.

Morning plunge further suggests that selling is widening.

NOTE: I changed the bias-up target from 2819.50 to 2811.50 based on the noon hour’s exit.

This morning’s choppy opening only got choppier, heading back down to a retest of its 2817.50 bias-down signal. A re-retest, since it had been tested already both pre-open and post-open. Probing under it would be no-bias trending that requires a retracement UNLESS the bias environment lapses under its 2710.75 bias-down target.

Which it did. On the way to sharply lower lows at 2791.75. Much earlier it had become likely the correction day was surely done, and last week’s distribution had resumed.

A corrective bounce was triggered above 2794.00 that became a bias-up. Touching its 2811.50 bias-up target is now reversing down. But this is still a bias-up environment, so testing its 2804.00 bias-up signal should define the window’s lower-end. Or be retraced unless the window lapses under its 2789.75 bias-down signal — under the signal, not its target, since the bias-up target is met.

Regardless, yesterday’s corrective session seems to be done. A retest of Monday’s low under 2790.00 is likely, and then 2770.00. That was a lot of distribution last week, and its next downleg should be more difficult to mask.

Morning’s fresh highs largely retraced.

The overnight rally had extended to attack 2824.00 where the open surged to the 2830.75 renewed bias-up target. A dip to 2825.25 support recovered momentarily to 2835.00, then reacted down into the bias environment lapsing.

And down to 2821.00 into the noon hour. And down to 2815.00 before the noon hour lapsed. Now down to 2813.00 as the afternoon bias environment begins.

That’s a lot of selling pressure to be expended, and the market is still 7 points positive. Nothing prevents that from turning negative, or deeply negative — today’s bounce was going to be only a temporary detour before it even began. But it is difficult to expend that much selling pressure by this late in the day and still to remain in positive territory.

This afternoon’s no-bias signal was invalidated by breaking under the 2819.50 bias-down signal at 1:30. Support at 2811.25 is being attacked, and its break would start to suggest much bigger selling pressure is becoming visible. Exiting the bias environment back above 2819.50 would allow a bounce into the close.