Mid-day Update

Another final final stage approaching as House vote nears.

Simply for having returned down to 2692.50, a test of 2688.00 was likely. That was regardless of peaking 1 tick short of touching this morning’s 2697.75 bias-up signal, which would have put into play a test of 2688.75.

2688.00 was the morning bias environment’s low. Exiting the bias environment back above 2692.50 would have indicated the pullback had ended. But a buy signal at 2691.25 was only touched and not triggered, as new lows into the noon hour tested 2685.50.

2685.25 is this afternoon’s bias-down signal. Testing it to within 1 tick or piercing it first isn’t as relevant as the morning’s similar attack on its bias-up signal. Afternoon bias setups don’t include the consequence of an offsetting test. But it still defines the bias environment’s extreme. And its reaction is testing and retesting 2690.00.

Back above 2691.25 would still signal momentum reversing up. Back under 2687.00 would make fresh lows likely, potentially to 2682.50, but likely to recover if probed during the no-bias environment. And recovering might need that — for the rubber band to be stretched down so it can snap back up — since bouncing out of the noon hour’s low hasn’t yet reversed the trend up.

Open’s surge has yet to extend.

The open’s surge to 2698.00 was retraced to test 2693.50. Repeatedly. Its 3-minute low essentially held, and 2693.50 is still an active inflection point. Its break would likely test the 2692.50 opening print, which would be normal to serve as support. Its test as support would likely be probed down to 2688.00, so recovering its test back above 2693.50 would marginalize sellers.

That bullish scenario is in place of this morning’s, which was signaled back above 2696.00. Its signal is still in-play. Extending to within 1 tick of the open’s 2698.00 high should have extended higher to 2699.75-2700.75 or 2703.00. But the noon hour and its exit is still ranging around 2696.00.

This afternoon’s no-bias environment could probe fresh session highs, and fulfill upside potential. Optimism seems excessive ahead of tomorrow’s tax reform vote, and amid the interim headline risk. But the later the origin of a downdraft without yet probing this morning’s high, the shallower and/or briefer it’s likely to be. A more credible downdraft would follow fresh highs.

And back to having no unfinished business above.

Unfinished business above at 2677.75 was fulfilled as the morning’s bias environment began lapsing. Its 3-point reaction down was recovered to higher highs at 2679.00 during the noon hour. Overbought RSIs at the target were neutralized, and not replaced. The 2678.75 bias-up signal did not trigger. There is no higher objective in-play, and no further unfinished business above outstanding.

The session-long rally has probed each prior timing window’s high, with two remaining — the afternoon bias environment, and the last 60-90 minutes. At least one should probe its prior timing window’s high. The final hour could plunge, and still have fulfilled the rally setup if 2679.00 is probed before then.

The bearish WedEX could cause the final hour to plunge. Or it could cause the final hour to drift lower. It can co-exist with the session-long rally, so long as one more fresh high is probed.

Meanwhile, the knee-jerk reaction to Rubio saying “yes” (the first time, try to keep up) should be retraced down to 2666.75. The choppy enhanced volatility environment that was signaled Wednesday is now greeting the Friday Factor’s afternoon slowdown potential. It’s difficult to maintain trending, but no easier to reverse it.

Bias environment lapses, volatility expands.

The “dry cleaners morning” held 2671.00 resistance through the open and well into the bias environment. Already reacting down before the bias environment came within view of lapsing, the open’s 2667.50 low was probed several minutes prematurely. It extended down anyway to touch the morning’s 2664.50 bias-down signal.

A bounce retested the premature portion of the break up to 2668.50, and then another slide began at noon. Extending down into the afternoon bias environment has tested and retested 2661.25. But the 2663.50 bias-down signal didn’t trigger, either way. This is a noN-bias environment.

Not a bias-down targeting 2657.50, although that’s the next likely objective if the drop extends. And not a no-bias likely to define this window’s low by the 2663.50 bias-down signal, although that’s how many noN-bias environments behave.

The latter happens often, and occasionally resolves in sort of a delayed bias-down. So, just hovering at or around 2663.50 until the bias environment starts lapsing — which has been the case so far this afternoon — could exit the bias environment as if the bias signal were triggering. So, fresh lows testing 2657.50 can’t be dismissed.

Recovering 2664.50 would start to signal momentum reversing up. Don’t forget that while this environment remains likely to try trending either way, it’s not yet any likelier to succeed either way. And there’s still unfinished business above at 2677.75.

Noon hour drop is extending ahead of FOMC.

This morning’s 2677.75 bias-up target became “unfinished business above” when left outstanding as the bias environment lapsed. The 2675.50 high was made as a knee-jerk reaction to a headline after the bias environment began lapsing. Its reaction down slid sharply as the noon hour began.

That’s not trending. Trending was already difficult ahead of this afternoon’s FOMC events. Retracing ground that was already covered doesn’t require sponsorship. Now sliding to within 1 point of this afternoon’s 2666.50 bias-down signal is awaiting 2:00 the FOMC policy statement.

Retesting the high — let alone the unfinished business above — is not required before more substantial selling begins. FOMC events can be a great catalyst for the volatility such a move would need. But 2677.75 can be left outstanding, so the chaRTroom will actively update relevant levels and setups during the events.