Mid-day Update

Sitting at highs, lacking reinforcements.

Breaking back above 2666.00 this morning would all but marginalize sellers, dismiss the attempt to break under 2663.25 and probe overnight highs. Recovering 2666.00 did probe overnight highs, and higher. Despite not triggering bias-up, the 2673.00 bias-up target was eventually touched.

That was the noon hour high. It was never put into play, but its attraction is neutralized. And there is no higher attraction in-play.

Attractions below, we have a couple.

The bias environment ended in a surge that was triggered by a favorable tax reform headline. Its 2667.50 origin is likely to be retraced. The morning’s rally above its 2667.25 bias-up signal originated during a no-bias environment, which is required to be retraced. No-bias just triggered after only touching the bias-up signal.

Meanwhile, election results from Alabama and a policy statement from the FOMC are right around the corner. Beyond the prevailing momentum, the rally doesn’t have any catalysts to attract reinforcements. Momentum is most of the battle, but back under 2669.50 would start to reverse it down.

Probing higher, testing resistance.

This morning’s reactions down from touching the 2660.50 objective ultimately included 2655.50. Close enough to the bias-up signal just 1 point lower to be in proximity of its break. If that’s what the market wanted, which it did not.

Rallying 4 points into the bias environment exit was extended through the noon hour to 2662.50. That elevated the 2661.25 to being decisive for still targeting 2667.25. Overlapping it at 1:20 invoked the grace period to allow extra time for triggering it. If that’s what the market wanted, which it did not.

So, the late no-bias environment has reacted down to 2659.75. Another point lower would signal momentum reversing down, limited for the next half hour down to this afternoon’s 2653.75 bias-down signal. Any lower after that could extend. If that’s what the market wants, which it does not if 2659.00 isn’t even broken.

Bias-up signal is resisting.

This morning’s bias environment wasn’t exited above the open’s 2647.74-2651.25 range. But the upper-end was still being tested, and it broke higher during the noon hour to 2654.50. That wasn’t too late to be credible, but it remains vulnerable.

This afternoon’s 2653.50 bias-up signal was still being tested to invoke the grace period. It triggered late, by the grace of a single tick. And it hasn’t improved since. Actually, a 3-point reaction down from 2655.00 is now attacking 2652.00 as support.

Any lower would trigger a sell signal. If reinforced any deeper than its first 3 minutes, then a probe under this morning’s lows would be likely, at least. Unless and until a sell signal is triggered, this afternoon’s 2660.50 bias-up target remains in-play.

Being Friday afternoon with two days of impending illiquidity fast-approaching, the window for reversing down is quickly closing. Exiting the bias environment without yet reversing down would be vulnerable to extending higher into the close.

Meeting the rally’s target enables inhibition ahead of tomorrow’s payrolls.

I certainly did not give buyers any benefit of the doubt through the open. That would change either by the opening 15 minutes holding a test of yesterday’s 2628.50 lows, or else by triggering the 2634.25 bias-up signal at 10:15. The latter developed, late, but still valid. One pullback developed along the way to the 2642.25 bias-up target.

The target was met during this morning’s bias environment. The noon hour consolidated narrowly around it. A blip-up coming out of the noon hour probed it, piercing the afternoon’s 2643.50 bias-up signal. A blip-up that has probed under the noon hour’s narrow range.

Triggering this afternoon’s bias-up would have been difficult. The morning’s buying pressure was fulfilled. And anxiousness ahead of Friday morning’s Employment Situation report commonly paralyzes Thursday afternoon price action.

Trending differs from backing-and-filling. That could still develop back down to this afternoon’s 2636.50 bias-down signal during the no-bias environment. And lower afterward. Meanwhile, probing above 2643.50 would be “no-bias trending” that requires being retraced.

NOTE: All price level references and bias parameters are now basis MAR, which has become the front-month, and currently trades at a ~2.50 premium to DEC.

Still holding support despite leaving unfinished business above.

This morning’s 2626.00 bias-down signal withstood 3-4 tests as support. They all held, especially through relevant windows. An offsetting test of its 2635.50 bias-up signal was put into play.

And it remains in-play, as the range persists. A noon hour dip from 2633.75 touched 2626.00 again, and held again. Now a break higher is testing 2632.00. Although this is a no-bias environment, there’s room to fluctuate up to its bias-up signal. Which happens also to be “unfinished business above” at 2635.50.

Back under 2628.00 would start to signal another downdraft underway. And this late in the day, another downdraft would be likelier to probe fresh session lows  — albeit only temporarily before recovering. Otherwise, fulfilling the upside attraction would become vulnerable to a downdraft, too.