Mid-day Update

Bearish WedEX looking for sponsorship.

Last night’s range was wide, first dipping under yesterday’s low before recovering 14 points back toward its highs. Last night’s range was also choppy, reacting down 10 points from that overnight recovery, very near the open. The width and choppiness persisted by a 12-point surge through the open.

This morning’s bias environment ranged choppily, too, but the noon hour has suddenly flat-lined. And the afternoon bias environment is even less volatile.

None of which alters whether the bearish WedEX is in-play. But setups like this rarely resume trending. Resolving down would be likely to begin suddenly and to drop sharply. Probing higher would still be vulnerable to resolving down per the bearish WedEX influence.

Disappointment becomes complacency.

The premise for anticipating this morning’s drop was a general disappointment in not having extended the rally overnight. Opening at the 2799.75 overnight lows bounced once, then fell to fresh lows at 2795.75. Its reaction up to 2803.00 avoided triggering bias-down.

Apparently, the disappointment lingered, as the bias environment’s exit probed fresh low at 2793.75. Its reaction only attacked 2802.00. Neither bias signal was tested, so no-bias triggered.

Enthusiasm hasn’t yet become the dominant sentiment again. If the bias environment exit isn’t extending down, a probe of fresh highs remains likely. Meanwhile, the market seems hesitant to rally among government-shutdown headlines that are swirling about.

No-bias trending is rallying sharply.

Despite triggering no-bias by holding this morning’s 2787.50 bias-up signal, no-bias trending has extended to yesterday’s 2801.00 open. An offsetting test of this morning’s 2772.50 bias-down signal becomes “unfinished business below,” along with oversold RSIs at yesterday’s 2669.50 low.

2801.00 is also this afternoon’s bias-up target, so that attraction is neutralized. As for being yesterday’s open, the common behavior of its retest is to actually probe it. The hesitation suggests pessimism, which is potentially bullish from a contrarian perspective. Also retesting yesterday’s 2808.50 high is entirely possible.

Although this upleg certainly wasn’t indicated by this morning’s no-bias, it is perfectly appropriate for the rally. As I noted after yesterday’s close, it will take more than a 39-point plunge to kill this rally. More, like already retracing a 39-point plunge while leaving unfinished business below. This strength is coming from a position of weakness.

Only one piece of unfinished business remains outstanding above — a new trend high close. And today’s WedEX may be predictive, too.

Now testing Friday’s highs.

Friday’s 2786.50 cash session close was the product of firming throughout the afternoon to probe the morning’s 2786.00 high. Extending into the weekend touched 2790.00. Despite this morning’s surge touching 2808.50, its reaction down is now testing 2790.00 as support. By more than 2 points.

And there’s no indication of recovery.

Both 1-minute and 3-minute RSIs are hovering above oversold. Barely threatening to get oversold, certainly not getting oversold, while the afternoon’s bias-down has triggered. Sellers aren’t getting ahead of themselves.

The next lower chart objective is 2784.00-2785.00, which includes this afternoon’s bias-down target. Lower prior highs under 2780.00 are 2760.00 and 2750.00. And each is equally vulnerable to being tested if today’s close is back under Friday’s highs — regardless of the gap now outstanding back to today’s 2800.75 opening print.

Pre-weekend volume contraction.

This morning’s rally peaked within 5 ticks of its 2787.00 doubly-renewed bias-up target. It didn’t require being met. Neither did its 2781.50 renewed bias-up target. A 7-point dip down to 2779.00 still recovered enough to exit the bias environment back above 2781.50. So, proximity to the high’s overbought RSIs makes its retest likelier today.

Back under 2781.00 would start to signal another pullback, first. And 7 points may prove shallow. Even a temporary dip has potential down to 2776.00 or 2773.00.

Meanwhile, this being a Friday afternoon, sponsorship is difficult to attract. Let alone, reinforcements for the prevailing trend. And especially counter-trend sponsorship. More common is to trade out the session within the morning’s range, or to hold probes of either end of it.

So, while breaking lower could turn negative, that wouldn’t be normal. Just reversing down would be difficult if not underway already by the bias environment’s exit. And while a retest of the highs is likely, and likely to hold, Friday Factors enable drifting higher into the weekend.