Mid-day Update

Buyers missed a path higher.

The post-open surge testing 2813.00 had collapsed back down to the 2790.25 overnight low. All of which was recovered into the morning bias environment lapsing. And then no more. Any higher for any longer could have isolated the morning’s probe of fresh lows, and opened the door to an afternoon short-squeeze.

Trending back down through the noon hour and into the afternoon bias environment has retraced the morning’s rally to almost 3 points from its 2790.25 lows. That’s 5 points under this afternoon’s 2798.75 bias-down signal, which did not trigger.

So, this is no-bias trending that requires a retracement to 2798.75, perhaps also the 2803.00 1:20 print. Then what I’ve been calling a “sloppy and choppy” afternoon will be able to resume its “toppy and droppy” downside. Resolving down prematurely would still get every benefit of the doubt for being able to extend down anyway, with only a recovery above 2804.00 suggesting a rally into the close.

No windows are being rejected.

This is this week’s fourth reversal of a substantial bounce. And this was the biggest reversal, ending at the lowest level. Yesterday’s rally was a function of all the ballast that had been dumped during the three prior intraday reversals. But as I described during the Market Tour, strong-handed distribution isn’t positioning for a 2-3 day correction. The pullback’s ultimate low could be 2-3 weeks away. And much lower.

The open’s bounce had an opportunity to reject the overnight slide. But the bounce was rejected, aggressively, quickly falling to touch the next lower objective at 2830.75. Its reaction offered an opportunity to reject the post-open slide. But that bounce was also rejected by sharply lower lows. The noon hour entry attacked 2809.00, already retracing yesterday’s pre-open 2813.75 low.

Now having avoided triggering this afternoon’s 2813.00 bias-down signal — which is still being tested — there’s another opportunity to reject the slide. Friday Factors could help to trigger a short-squeeze, but there’s no requirement to bounce at all. And there’s no requirement to resume the decline today, but those Friday Factors: the growing realization of this being a distributive market is greeting two days of impending illiquidity. Refer to the first paragraph.

Strong hands aren’t buying here. Not, yet.

This morning’s bias environment ultimately extended through its 2842.00 bias-up target to 2856.50. The noon hour’s dip attacked 2846.00, then recovered to attack this afternoon’s 2854.50 bias-up signal. Which didn’t trigger, and was only touched at 1:30 to threaten invalidating the no-bias.

This is a no-bias environment, so its 2854.50 bias-up signal is likely to define the window’s upper-end. Extending above it would be “no-bias trending” and require being retraced. Which wouldn’t be surprising for a doomed rally to try, but it’s not necessary. The rally can wait until the bias environment begins lapsing before resuming.

And resuming the rally is likely, so long as 2848.75 now holds as support. Even then, the Isolation setup will’s reward retesting this week’s ~2860.00 high would still be likely tomorrow, which would be vulnerable to retracing the rally from this morning’s lows.

Weak-handed or not, sellers are being rewarded.

Testing, retesting, and re-retesting this morning’s 2828.50 bias-down signal ultimately held in time to trigger late no-bias. An offsetting test of its 2842.25 bias-up signal was put into play. But it was hardly attacked, but for a structural fresh high at 2833.00.

And then fresh lows were probed down to 2821.00. A recovery seemed to be forming around 2825.00 when a Trump China trade comment triggered a spike down to fresh lows at 2817.25. Now a bounce is retesting 2825.00.

Weak-handed sponsors are likely producing the noon hour’s fresh lows. As likely as they were producing this morning’s lows. Which is to say, so what. They’ve been pretty productive.

Usually trending beyond a prior extreme (yesterday’s lows) would be difficult ahead of FOMC. Of course, usually price action reacts to political uncertainty like this morning’s Brexit headlines.

The latter may have ended for the day, considering what time it is. And the former is about to begin, with the Policy Statement at 2:00 and the Fed Chair Q&A at 2:30. Perhaps those headlines will find price sufficiently discounted for a favorable reaction up — or at least, a recovery from a knee-jerk reaction down.

Intraday buyers bailing again.

The open’s sell signals didn’t stick and the 2847.75 bias-up target was exceeded at 10:15 to renew the bias-up signal. The 2853.50 renewed bias-up target was attacked to within 3 ticks neutralizing it. The 2853.00 “new Globex trend extreme” was not actually touched. Another downdraft tried to trigger a sell signal. It was productive down to 2844.75, but still contained to within its first 3 minutes.

And then time ran out, as the bias environment came within view of lapsing in 10-15 minutes. It began lapsing at 11:30 back at the 2849.75 open, ready to face the consequences of multiple failed attempts to break lower during a relevant timing window — to reverse direction aggressively. So, the morning’s 2857.00 renewed bias-up target was being probed to within 1 tick of 2859.00 into the noon hour.

Quickly fulfilling an aggressive consequence doesn’t make that aggressive consequence’s sponsorship strong-handed. The burden of proof was once again on intraday buyers. Yesterday morning’s buyers were absorbed, and the afternoon buyers had gained no traction. Today’s intraday rally was retraced 6 points to natural support at the 2853.00 overnight high.

Just in time to be extra vulnerable to exacerbating the reaction to a China trade headline. It triggered a plunge back down to the morning’s 2841.75 bias-up signal. And now the plunge has been retraced by 61.8%, like most headline-triggered plunges and surges, to attack 2852.00. The 2851.00 bias-down signal has held to trigger late bias-down.

Now two intraday rallies seem to have been sponsored by weak hands. The distribution ahead of tomorrow afternoon’s FOMC events suggests at least a very volatile reaction.