Mid-day Update

Downdraft attacking the lows, while it can.

My suspicion of this morning’s bias-up signal was based partially on it being triggered late. Also, the open’s Symmetrical Triangle — a narrowing range — tends to break falsely in one direction before reversing more substantially in the opposite direction. And if the market had intended to rally, then gapping up more substantially would have been a more appropriate launch.

Actually, those were just the open’s basis for being skeptical about the bias-up signal. They were in-line with the bigger picture look at there being an opening for sellers between the week’s two seasonally bullish weekends. And sellers were still attracted to “unfinished business below” from last Wednesday.

The morning’s late bias-up did extend to fresh session highs at 2691.00 after 10:15, so its 2693.75 bias-up target becomes “unfinished business above.” Meanwhile, it can remain outstanding, because a sell signal triggered under 2688.75. It has extended through the noon hour to 2683.00. triggering late bias-down.

A retest of oversold RSIs at last Wednesday’s 2679.00 low is the bias-down target. There’s also an objective below it at 2675.50. What there is not is time. At least, not a lot. Whether sellers lose their influence this afternoon, or after gapping down tomorrow, there will be potential for seasonal bullishness into the weekend — look out below if there’s not.

6-tick range avoiding all controversy.

While overnight and opening action were contained within Friday afternoon’s range, the ranging was choppy. The range has persisted through the noon hour, but narrowed considerably, as the choppiness disappears.

Again, neither bias signal is being attacked. Much more so this afternoon than this morning. None of which precludes a trending attempt this afternoon, but makes a trending attempt likelier to extend for releasing its pent-up buying or selling pressure.

Still not rallying does continue to suggest there are inhibiting attractions below. Fresh highs would get a benefit of the doubt for extending, but more briefly than would a break lower.

Backwards day: Cryptos are jealous of stocks.

Neither bias signal was touched as this afternoon triggered no-bias. Remember that this is Friday afternoon, ahead of a three-day holiday weekend. No matter the attraction(s) below and rejection of the overnight rally; no matter the attraction above and the inability to decline; Friday afternoons are historically vulnerable — if not likely — to fluctuate narrowly into the close. This morning’s choppy open does keep open the door to more volatility than normal, but that would be more of an exception.

Bitcoin and other Cryptocurrency holders are jealous.

Bitcoin’s plunge today is a not-unique reminder that the ultimate scalability is irrelevant compared to the pace of each interim adoptive leg. Organic checks-and-balances within a system are entirely capable of containing growth’s pace, rewarding earlier adopters, punishing late believers, and finding the lower price that can start the next cycle toward scale. The third element has been proved repeatedly by past Bitcoin “crashes.”

BTC rallied sharply during the 1-2 weeks preceding CBOE futures launch two weeks ago. Anticipation was more reserved as it ranged sideways since CME futures launched this week. I had already posed the question whether the next significant upleg would be delayed until the pre-launch surge is corrected. This morning’s plunge seems to be the answer.

Before either futures contract launched, I had also noted that they would enhance price discovery. Also that the discovery could limit the upside. In fact, other observations during the past two weeks included alternative Crypocurrencies extending their own rallies. My preferences were Litecoin and Ethereum, but those became overshadowed by late-gainers like Monero, Iota and Ripple. For now, these were the biggest beneficiaries of Bitcoin and its futures.

They’re all down sharply, so divergence is flooded by the one tide, which is either rising or falling. The tide was rolled this week by Litcoin’s founder selling out, and tax treatment clarification in the tax reform bill. I’ve previously described the futures hedge that larger holders might be using to delay their taxable gain — we’ll see what happens at midnight January 1st.

Meanwhile, this current downleg originates from a retest of the recent high, which had preceded futures launch. Dipping back down to their interim low was only noise. The actual correction began under the interim low — that’s barely 24 hours old. Could another downleg be lying dead ahead? And if that’s a low, or even the low, another unbridled upleg isn’t likely. This pattern often leaves a supply overhang.

This morning’s plunge bottomed soon after futures were halted. My pre-open Market Tour had pointed to a 10,000-handle for a low, and its eventual test has reacted up to attack 14,000. Clearly the futures halt was a catalyst. So, what happens this weekend when futures don’t trade, but Bitcoin does? If the correction isn’t already done, and no halt is impending, another downleg could easily test 8,000 – 9,000.

I’ve added daily coverage of Cryptocurrencies to my daily Market Tour and Market Wrap recordings, as well as reviewing interesting action intraday in the chaRTroom. That coverage will be expanded in 2018… Enjoy!

Morning rally trying to extend.

Only minutes after triggering this morning’s 2687.25 late bias-up signal, the market surged through the open’s 2690.50 high and touched the 2692.50 bias-up target. The balance of the morning absorbed a shallow dip back to the open. The noon hour ranged flat-to-higher.

Exiting the noon hour in a surge to fresh highs ran into more bias resistance at the afternoon’s 2695.50 bias-up signal. Testing it at 1:20 and 1:30 has triggered noN-bias. Not bias-up with a higher target, and not no-bias contained by the bias-up signal.

noN-bias often behaves like both no-bias and bias-up — hovering at the bias signal through the window, then essentially triggering it late as the window lapses. New highs would be almost unavoidable, targeting 2699.75-2700.75 and 2703.00.

Meanwhile, the noon hour’s exit is the only probe above the 2688.00-2692.50 buffer, below which the market become likelier to probe fresh lows under 2679.00 down to 2675.50. Exiting the bias environment back under 2692.50 would reinstate any near-term potential to fulfill those fresh lows before the holiday weekend.

A brief window for fresh lows.

This morning’s 2679.00 low was accompanied by oversold 1-minute and 3-minute RSIs that require an eventual retest. That hasn’t prevented bouncing into and out of the noon hour, to within 1 tick of this afternoon’s 2688.50 bias-up signal. Too late. This afternoon is a no-bias environment, and its upper-end should be defined by 2688.50.

Meanwhile, rejecting both of this morning’s bias-up parameters had put into play offsetting tests of the morning’s both bias-down parameters. Its 2681.50 bias-down signal was tested, but a test of its 2675.50 bias-down target has become “unfinished business below.”

So, about that seasonal holiday bullishness… Recall that there’s a window for injecting a pullback before a decline starts losing sponsorship. Even if we knew with 100% certainty that sellers are done, the attractions below can be fulfilled by sideways ranging. The range’s upper-end is essentially resisted by 2688.00-2692.50, so any bullish scenario requires its recovery.