Mid-day Update

Rallies and bounces failing slowly.

This morning’s 2643.00 bias-up signal was touched once before triggering no-bias. That put into play an offsetting test of its 2636.50 bias-down signal. The bias-up signal wasn’t touched in time to invoke the grace period. And it wasn’t recovered through 10:30 to invalidate its 10:15 signal. It was a no-bias environment.

That didn’t prevent no-bias trending above the bias-up signal. It extended to its 2648.25 bias-up target. Any higher as the bias environment started lapsing at 11:30 would have done what wasn’t done an hour earlier. But its resistance held, so no-bias remained intact, and a test of 2636.50 became “unfinished business below.”

No-bias trending must retrace to its broken bias signal, and often also retraces its 10:15 print. That was 2640.75, and it has been probed down to 2638.25. That was also this afternoon’s bias-down signal, which was still being tested at both 1:20 and 1:30 to trigger noN-bias

So, 2636.50 remains in-play. The noon hour’s exit touched this morning’s 2638.25 lows, and bounced. That’s now obligatory support, likely to break lower, and still likely to also test 2631.75 as support.

Consolidating the post-open slide.

Gapping up to 2660.25 extended 5 points to probe the overnight range up to 2665.25. And then it reacted down. First to test 2658.00, and then to test 2651.00.

2651.00 had potential to hold the decline. And it has held. But while the decline hasn’t extended, price action has only ranged back up to attack 2658.00. The decline had potential to 2649.00, which can’t be dismissed until the consolidation breaks higher.

A fresh session low down to 2649.00 or lower today could still recover to retest today’s highs. But today’s highs don’t require a retest. And waiting too long to probe fresh session lows would risk inhibiting counter-trend sponsorship from absorbing it, clearing the way for a deeper decline.

Flynn statement rattles the market.

This morning’s no-bias had at least attacked its 2651.00 bias-up signal. No-bias trending above it would have been credible. Doomed, but credible. Then the news broke that Mike Flynn would please guilty, driving the market down sharply. Then another headline that Flynn claimed he was directed by Trump.

Tuesday afternoon’s “unfinished business below” at 2617.50 was neutralized to within 2-3 ticks. Its reaction up was undermined by 3-minute RSI being persistently oversold. Indeed, another plunge collapsed to touch 2605.00.

2605.00 was the next lower objective under 2617.50 that I described during this morning’s Market Tour. Its first reaction up tested 2627.00. This afternoon has extended higher to trigger the 2632.00 bias-up signal. Its 2637.50 bias-up target is now being probed up to 2640.00.

This morning’s collapse was triggered by a knee-jerk reaction to headlines. This is almost always retraced entirely, often sooner rather than later. The plunge’s 2649.00 origin is now only 9 points higher, having rallied 35 points off the low.

Meanwhile, the tax reform vote is scheduled to begin at 2:00. It’s very likely to pass, but the past two sessions already expressed a lot of favorable sentiment for that. An obligatory knee-jerk reaction to the vote could get the market back to the plunge’s 2649.00 origin — perhaps through it to also test 2654.00. Or the plunge’s origin may have been tested already.

No other optimistic development could be anticipated before the close. And the weekend’s impending illiquidity could trigger Friday Factors that influence selling into the close. New session lows would be possible, but not required. Just reacting down would be likely, although be careful of a bigger squeeze into the weekend — the Flynn news may have been overly-discounted, too.

Seemingly weightless rally rediscovers gravity.

Maintaining the open’s gap up had created an anchor that would be likely to attract any reaction down back up. Reacting down was possible, but only as backing-and-filling down to yesterday afternoon’s range.

That wasn’t necessary.

Rallying wasn’t the only alternative to backing-and-filling. But rallying would require a specific characteristic — aggression. Rallying out of the open’s range would have a steep slope, or else it wouldn’t be credible.

The morning’s bias environment had already rallied 8 points through 2638.50 up to 2646.50. Its 5-point pullback triggered a sell signal that was barely productive before entering the noon hour, which resumed the rally. Before the noon hour ended, the rally’s 2657.25 target was being probed by 5 ticks.

Reacting down into and out of the 1:20 bias timing window still managed to renew the bias-up signal above 2651.00. But 2657.25 was the renewed bias-up target, and it was already met. The reaction extended down to within 2 ticks of this afternoon’s 2645.50 bias-up signal — which should define the window’s lower-end if tested.

Probing under 2645.50 during the bias-up environment would be “bias-up downtrending.” It would require being retraced to the bias-up signal, if not also to the 2652.75 1:20 print when bias-up was triggered. The 2645.50 bias-signal is so far holding. A bounce limit is being tested, perhaps to slow-play the clock until breaking under 2645.50 would no longer be subject to recall.

Extending under 2643.75 would start to signal something more substantial underway. It would all but require a complete retracement back down to 2629.00. It could evolve into something much deeper.

Not rallying, but not reversing down.

This morning’s reaction down from testing its 2633.50 bias-up target was probing under yesterday’s 2627.00 highs as the bias environment began. Chipping away at it extended lower to test 2620.00 as the noon hour began. Its reaction held the afternoon’s 2625.50 bias-up signal as resistance.

So, bias-up did not trigger. Neither did no-bias, since the bias signal was still being tested at both 1:20 and 1:30. This is a noN-bias environment. It often behaves like a no-bias, holding the bias signal that didn’t trigger. But that’s not required.

Meanwhile, this morning’s 2617.50 bias-down signal remains in-play. Its attraction could cause another probe under yesterday afternoon’s 2623.00 pullback low. So far, backing-and-filling under 2623.00 has been contained to one instance, leaving the morning’s bias environment and entering the noon hour. Testing 2617.50 would suggest the rally above 2623.00 is done.

Back above 2626.75 would start to signal the backing-and-filling threat under 2623.00 had been absorbed. The minimum reward would be to retest this morning’s high, probably today. The potential reward would be to extend above 2657.00.