Mid-day Update

Opening rally extends into missile launch… and through it?

The open’s 2606.50 buy signal ultimately extended higher through the morning’s bias environment exit, which touched the 2610.00 bias-up target. Then the rally accelerated. Surging 4 points into the noon hour, and adding another 6 points through its exit.

This afternoon’s 2615.00 bias-up signal easily triggered. Its 2622.00 bias-up target has been attacked to within 6 ticks. All on the same leg that had been triggered above 2606.50. What could go wrong.

Well, already slipping 2 points to 2618.50, the latest N. Korea Missile launch triggered a drop to within 1 tick of 2615.00. A 3-point bounce has reacted down 7 points to 2611.00.

Being a knee-jerk reaction to a news headline, the drop’s sponsorship is weak-handed. The pullback should be only temporary. But retesting the high and fulfilling the bias-up target need to recover 2616.00 before extending under 2611.00

Rally effort still failed, not rejected.

This morning’s bias environment was well-defined by resistance at its 2604.50 bias-up signal. An offsetting test of its 2596.50 bias-down signal was put into play. A late-morning slide down to 2597.75 stopped short of the objective, and its reaction is testing 2602.00.

The slide did not stop short enough to be considered “ineffectual optimism.” That would be bearish from a contrarian perspective. Eventually fulfilling the objective could still hold. But the objective should still be attacked, and much more delay would start to resemble ineffectual optimism anyway.

Meanwhile, the noon hour’s bounce might extend higher this afternoon. But any reliable extension would need to exceed 2603.75 first.

Backing-and-filling with FOMC just ahead.

Gradually eking lower and lower has touched 2593.75 coming out of the noon hour. A blip-up to 2596.00 is behaving a little optimistically ahead of FOMC Minutes due out momentarily at the top of the hour. Not so optimistically as to confidently fade it. And not that FOMC Minutes create so much volatility.

At least, Minutes don’t normally trigger major moves. It’s not the actual policy statement. But today’s low volume environment might be exploited. Still having room down to 2591.75 or lower could be exploited, too. And so could the newly created room back up to intraday or overnight highs around 2600.00.

Meanwhile, note that if the reaction is limited in duration, then we’re likely to hold Market Wrap early — either at 2:22 or 3:03 ET.

CORRECTION: The afternoon bias-up signal was mis-identified as 2600.00. It is 2601.50.

Actually, it’s trying to re-start.

The first hour’s rally to new highs extended slightly into the morning bias environment’s 2599.00 high. Apparently, ranging had already begun. It persisted through the noon hour, and out of it, triggering no-bias.

So, this afternoon’s bias environment has room to test its 2600.50 2601.50 bias-up signal. It’s being attacked now. It can be probed by several ticks, and overlapped to any degree. But 2600.50 2601.50 should define the bias environment’s upper-end. Trending any higher would be “no-bias trending” that requires being retraced.

Meanwhile, breaking out to 2600.50 2601.50 is actually the first attempt to extend the morning’s rally. It’s shallow — so far — and doesn’t have the luxury of backing-and-filling to refuel its breakout attempt. Reacting back down under 2597.00 would become likely to reverse the intraday trend back down, whether to 2591.75 or 2588.25.

Building on small bullish WedEX gain.

Consolidating at or under 2580.25 resistance persisted through the open, through the opening hour, and well into the morning bias environment. Eking higher eventually touched 2583.50, clearly a post-open high, and confirmation that isolating the overnight probe under Friday’s low had gained traction.

A noon hour dip tested 2580.25 as support and recovered to fresh highs through the noon hour’s exit. But the afternoon’s 2584.50 bias-up signal has been attacked to within 1 point, but it did not trigger.

Being no-bias, the afternoon bias environment can still test 2584.50 or even probe it. But trending above it would be “no-bias trending” and require at least retracing its probe. RSIs are overbought currently, so a reaction down from here would likely recover.

Meanwhile, this morning’s bullish WedEX influence — such as it was — is irrelevant. Extending higher at all during the balance of the morning would be due to other attraction. So long as no pullback limit is violated, a retest of last week’s highs and higher remains likely.