Mid-day Update

Only one template says higher, and its clock is ticking.

This morning’s renewed bias-up extended. And extended. The renewed bias-up target was essentially Sunday night’s 2577.25 “new Globex trend extreme.” Its retest was fulfilled during the noon hour up to 2579.25. That pierced this afternoon’s bias-up signal by 1 tick, and held it. So, this is now a no-bias environment.

Friday afternoon no-bias environments tend to mean it, especially when a bias signal’s test holds. The balance of the bias environment — and often the balance of the session — simply ranges flat, if not flat to lower.

Today’s rally might seem an excellent candidate for ranging flat-to-lower. Primarily because resistance was nominal along the way up to neutralizing its objective. That might be compensated by finding significant resistance above it, which is the likeliest scenario. But since the objective was met by a single leg above the bias-up signal, the second likeliest scenario for one more probe higher remains possible.

So, how will we know? Or, how early will we know? Being a Friday, probing fresh highs through the bias environment exit tends to marginalize sellers through the close. Otherwise, breaking back under 2575.50 and 2572.50 would signal the a deeper pullback underway.

Choppy ranging ahead of three high-profile earnings.

Perhaps the session has been contained, but not necessarily paralyzed. The morning’s post-open attack on 2564.00 reacted down to 2557.25. Its recovery up to 2565.00 was retraced to fulfill the consequences of its no-bias trending above 2561.50 and 2558.50. All before the noon hour.

The noon hour contained a knee-jerk reaction to a negative headline about tax reform talks. But only a knee-jerk reaction, as price action remains contained within a narrowing range.

Perhaps it’s just anxiousness ahead of post-close earnings due from AMZN, GOOGL, and MSFT. That’s normal, but usually not until the afternoon. It seems to be the inverse today, with a lot of energy being expended to contain trending attempts, instead of no energy being expended to even try trending.

The ranging may yet persist into the close, as it normally does the afternoon ahead of these three earnings (let alone all three on the same day). Another break higher would still be credible for extending. But the only “unfinished business” outstanding is below from this morning at 2550.50, keeping alive the attraction back into yesterday’s range, and the potential for probing under yesterday’s low.

Too deep to be temporary, but what about a temporary bounce?

The open’s slide from 2565.00 extended substantially lower, testing and attacking all sorts of relevant prior lows down to 2541.50. But it may be done, or at least bottoming. Maybe. Entering and exiting the noon hour under 2554.00 has created a weak base to try launching bounces.

The Employment Situation report’s intraday low was 2541.50. Reacting up from touching it during the noon hour is very likely only an obligatory bounce, i.e. temporary. That bounce could extend, back up to 2554.00 or higher. It just touched 2550.00.

Meanwhile, this afternoon’s 2546.75 bias-down signal just avoided triggering. Its 2540.75 was attacked to within 3 ticks, so it wouldn’t have become “unfinished business below.” But the target’s test would be likely if 2546.75 doesn’t hold through 1:30. Back under 2546.00 at any time would target fresh lows.

Retesting the highs before probing lower to 2536.00 is now unlikely. Not without closing at least above 2563.75. And probing lower could extend much deeper than 2536.00.

Gap fill holding, and holding, and holding.

Greeting the open at this morning’s 2568.25 bias-up signal’s resistance seemed suspicious. Its quick reaction down fit better, putting into play fresh lows. Only the gap back down to yesterday’s 2563.50 close was tested.

Reacting to a gap is not unusual. But the reaction’s reaction has gone into hibernation. Its return to the 2567.75 opening print didn’t reverse back down, and neither did it accelerate higher. Instead of inflecting there, a 2-point 2-hour range has developed.

Which changes the pattern, a little. Mostly just its behavior. The narrow range’s room for noise is defined by 2566.25-2570.25. Breaking either would still be likely to extend in that direction. But breaking lower would likely find an air pocket down to fresh lows. Breaking higher would at least be vulnerable to accelerating.

Resolving up won’t invalidate the “unfinished business below” now outstanding at 2560.25. But resolving up would enable fulfilling unfinished business above with a new trend high close.

Post-open decline is extending.

The morning’s bearish WedEX influence stepped in front of overnight new highs, a gap up, and a test of the 2575.75 bias-up signal. Downtrending through the open put into play an offsetting test of the morning’s 2567.25 bias-down signal. It was attacked only to within 3 points at 2570.25, so it becomes “unfinished business below”

And that was within the context of a no-bias environment. This afternoon’s no-bias signal also has room down to its 2567.25 bias-down signal just as noise. The attraction helps. In fact, fresh lows just printed 2568.75.

Could this develop into a deeper, protracted decline? A durable top is unlikely — expirations don’t usually end a trend, and there’s still a requirement for one more new high close. But reversing two overnight rally attempts to close negative could keep selling pressure active through Wednesday’s open. Last week’s “lower prior highs” around 2562.00 could be tested.

First things, first. Trending down to 2567.25 remains intact so long as 2572.75 isn’t recovered. Coming to within 3 ticks at 2568.00 would lower the buy signal 1 point to 2571.75. This morning’s WedEX influence is moot, so potential for rallying into the close can’t be discounted.