Mid-day Update

No-bias afternoon underway.

This morning’s reaction down from 2469.00 had triggered the 2465.50 bias-down signal late, and then extended to 2462.00. That had firmed back up to 2465.00 when news broke that N. Korea had resumed its effort to destroy the Sea of Japan. That triggered a knee-jerk reaction down to touch the 2461.50 overnight low.

Which triggered a knee-jerk reaction back up to 2465.00 and through it. The noon hour was entered at 2468.00.

This morning’s 2458.50 bias-down target is unfinished business below. But there’s no timing to its eventual test. Especially with this being a Friday, now a Friday afternoon. This afternoon’s no-bias signal won’t be of much help, and the balance of the session may simply persist in negative territory.

Having said that, back above 2468.25 would being signaling another recovery attempt underway. Natural resistance lies above at yesterday’s 2473.00-2475.00 close. There is otherwise room down to 2458.50, but any lower when the bias environment lapses could slide sharply into the weekend.

I’LL BE AWAY FOR THE SESSION’S FINAL HOUR. MARKET WRAP WILL BE EARLY AT 2:34 ET.

My signals doubted this morning’s gap up, but I didn’t. Guess who won that duel.

Gapping up above prior highs, maintaining the gap up, and preferably extending it. These are the ingredients to rallying on the morning after buyers fail to gain traction. There are exceptions, but they’re doomed to failure. Despite knowing this morning’s gap up wasn’t extending above prior highs — let alone maintaining — I anticipated a shallow or brief pullback to push higher.

The pullback was neither shallow nor brief. The gap up had failed to trigger my signal, and its reaction had failed to exploit my leeway. But the 2478.00 bias-up signal triggered late, suggesting that the original scenario may be developing, anyway.

Firming through the morning to within 1 tick of the 2480.00 opening print suddenly found itself triggering a sell signal under 2477.00. And probing under the bias-down signal another 6 ticks lower. Then piercing the 2469.00 bias-down target in time to renew the bias-down signal.

And then continuing the plunge to probe under 2458.50 by 6 ticks. All of the probes were also overlapping 2458.50 which warned us the drop may be pausing.

In fact, a buy signal has triggered above 2460.75 has come within 6 ticks of its 2466.50 target. Oversold RSIs at the low require an eventual retest, and may prevent the target or any further recovery. Retesting the low may also resume the decline. There’s no guarantee that a meltdown won’t begin immediately. What I can say is that it’s unlikely to begin the same session that printed a new trend extreme.

Still hovering at recent lows.

Friday afternoon’s retest of Thursday’s low wasn’t going to break lower, not after Friday morning had tried already and failed. That was Friday, and it was due to the “Friday Factors” which are a function of two days of illiquidity bearing down at an exponential pace. Strong-handed sponsorship isn’t changing its recently expressed opinion.

Now this is Monday. The only Monday Factor (there really are none) is that an entire week of liquidity lies ahead. Even if proved wrong later, it’s much easier to generate sponsorship. So, Thursday’s low is vulnerable again to breaking.

The vulnerability to breaking under Thursday’s low has one exception. It is that this morning’s open should have gapped down under it. But it didn’t. The vulnerability is equally matched by the vulnerability to rallying. Buyers are not marginalized.

Neither vulnerability may be exploited today. Having failed to exploit Friday’s support, the vulnerability for breaking lower would become greater. But the path down would still require gapping open under Thursday’s low (and lower). Meanwhile, breaking either end of this afternoon’s 2463.50-2459.25 bias signals before the close would be likely to trend in that direction.

Only attacking the bias-up signal.

Gapping down had extended to 2463.50, which had been unfinished business below and this morning’s bias-down target. It held as support to avoid renewing the bias-down signal.Two more tests held, and the balance of the morning ranged sideways in negative territory.

It wasn’t optimal like isolating 2463.50‘s test to the open, but not gaining traction for expending selling pressure all morning isn’t that far removed. Otherwise, this morning’s pattern delivered everything that the bullish template required.

The morning’s bias environment exit was had firmed back up to the 2465.75 open. Extending through the noon hour attacked the 2470.50 bias-up signal to within 2 ticks. Bias-up didn’t trigger. This afternoon’s bullish WedEX influence could exceed the 2470.50 bias-up signal anyway, or wait for the bias-environment to lapse. Regardless, back under 2465.50 would signal momentum reversing down.

Skipping across resistance .

This morning’s plunge bounced back up to 2473.75. Breaking back under 2471.25 had signaled momentum reversing down this morning. Confirmed under 2469.25, it reached 2467.75. Extending 2 more points would have neutralized the oversold RSIs at the low. Extending down 4 points would have fulfilled the 2463.50 “unfinished business below.”

The noon hour recovered back up to the 2473.75 bounce high. That’s also this afternoon’s bias-up signal, and despite fluctuating around it, the signal didn’t trigger. This is a no-bias environment, and its 2473.75 bias-up signal should define the window’s upper-end. It’s still being overlapped.

Meanwhile, the gap back up to today’s 2474.00 open has been retested. Not arbitrarily, but from testing “lower prior highs” first. This won’t be left outstanding as “unfinished business.” The 2476.25 “new Globex trend extreme” must be retested eventually, too. Not necessarily today, although it could be.

Neutralizing an attraction above during a no-bias environment can produce a significant reversal. That’s what happened Tuesday morning when the bias-down target was met in a no-bias environment. That was 25-30 points lower. Regardless, back under 2471.50 would signal another attempt at probing fresh session lows.