Mid-day Update

Sloppy morning opens the door to paradigm shifting down.

The bearish WedEX wasn’t influential Monday morning. Until it was.

The first half-hour surged to fresh highs at 2840.50. Trending down throughout the morning had essentially required the opening 15 minutes of volatility to already be in decline. So, a 5-1/2 point dip was recovered to retest the high up to 2841.00.

Then the last half-hour of the bias environment collapsed, back down to the 2830.25 open. The bias environment made no net gain. And the exit even extended a little lower down to 2827.50. The bias environment finished lapsing at noon, back at 2830.25. So, WedEX was influential, however useless it was for having delayed its effect.

While WedEX’s relevance ends with Monday morning’s bias environment, the end of Monday morning’s bias environment is still relevant. The window isolated a failed probe of fresh highs, suggesting a near-term peak. And the reaction down’s test of relevant structural support — the 2830.25 opening print, which was also Friday’s futures close — was still being tested at noon, and not itself isolated.

Now this afternoon’s no-bias environment is testing its 2836.25 bias-up signal as resistance. It should define the window’s upper-end. This makes it a good candidate for being a corrective bounce’s peak before resolving down to fresh session lows. So, we’re monitoring for any credible reversal down that could snowball aggressively. Otherwise, exiting the bias environment in rally mode would be bullish.

Probing sharply higher highs.

As announced previously, I’m using Friday afternoon’s performance as an input to the WedEX’s influence on Monday morning. If the indicator is influential this afternoon, then its passively bearish posture would suggest gravitating or trending back down before the close.

Meanwhile, buyer have expended a lot of buying pressure. As was suspected, exceeding the morning’s 2825.25 bias-up target would next target the 2831.00 area. The surge between them was a surprise, and kept alive momentum for the noon hour to extend higher to 2836.50.

This afternoon’s 2831.50 bias-up signal has triggered, putting into play a test of the 2838.25 bias-up target. Having said that, NQ underperformed ES with a lower high, suggesting that institutional hands are shunning speculative issues. Until the pre-1:20 high is exceeded, there’s risk of a deeper dip despite being bias-up.

Can’t even keep an overbought market down.

The overnight test of 2825.00 might have been noise testing its resistance, or it might have been on the verge of extending higher. Negative China trade news prevented discovering which, as its reaction ultimately extended down to 2808.50 post-open.

Sellers have not been rewarded for their subsequent effort. First, the morning’s 2813.00 bias-down signal triggered, but wasn’t at all productive. Neither was it invalidated, and its 2806.25 bias-down target is “unfinished business” that requires an eventual test.

Also, the morning’s bounce attacked 2821.00 before noon. Its reaction down only touched this afternoon’s 2814.00 bias-down signal triggering no-bias. Being the afternoon, an offsetting test of the bias-up signal is not required.

So, sellers have inhibited or overcome buyers, while missing opportunities to be productive. Back above 2818.25 would start to signal a bigger bounce underway, probably for more topping process. Meanwhile, a pullback as low as 2801.00 could end the pullback and allow a more durable rally to resume.

REMINDER: Join us in the chaRTroom after today’s close at 4:30 ET for a special introductory overview of the If Then method. It’s onboarding for newer subscribers, a refresher for seasoned subscribers, and a good opportunity to focus on strategy and tactics as market volatility begins heating up again…

This morning’s 2811.25 bias-up target was barely exceeded at 10:15 to renew the bias-up signal. But it didn’t hesitate proving itself out, extending to fresh highs before 10:30. Then through the 2818.00 renewed bias-up target. And higher.

The bias environment began lapsing at 11:30 near 2824.00.

Reacting down to 2817.50 during the noon hour has recovered to test the afternoon’s 2723.00 bias-up signal. It wasn’t exceeded, triggering late no-bias. Which doesn’t prevent probing higher anyway, but probing higher anyway would likely reverse back down sharply.

Back under 2819.50 at any time would already signal momentum reversing down. Nothing requires retracing all of today’s rally, but its possibility is among the afternoon’s templates.

Still hovering at the highs.

This morning’s 2803.00 renewed bias-up target was attacked to within 3 ticks several times, twice to within 1 tick. And now it’s being attacked again, this time during the afternoon’s bias environment.

This afternoon’s bias-up signal is 2303.75, and it didn’t trigger in time to signal bias-up. So, it should define the window’s upper-end if tested. Probing above it during a no-bias environment would require its retracement, potentially down to the 2798.00 1:20 print.

A reaction down would have room to the 2790.75 bias-down signal. Nothing requires trending at all for the balance of the session, but the last 60-90 minutes can be vulnerable to reversals.