Mid-day Update

Filled gap holds post-open drop, launches its recovery.

A funny thing happened on the way down to 2377.25. The first time. That was after the open’s gap up had held a test of the 2385.75 bias-up signal, which put into play 2377.25. That dip filled the gap back to Friday’s close down to 2380.75, double-bottomed while RSIs diverged positively, and bounced.

A lot. All the way back up to the 2387.50 overnight high. And the pattern that developed there was all but ensured to probe higher.

Probing higher still is all but ensured. Even after the morning’s bounce up to 2387.50 collapsed down to 2381.25 in reaction to a headline. That was totally unexpected. Almost totally. After all, the ongoing headline risk is why even the likeliest resolution can only be “all but” ensured.

Anyway, being a knee-jerk reaction to a headline, the second dip’s weak-handed sponsorship invited buyers. An a bounce has recovered to attack the morning’s 2387.50 highs. Probing higher is all but ensured.

A test of this morning’s 2377.25 bias-down signal has become “unfinished business below.” Another break lower would likely extend down to the objective, no matter how weak-handed its sponsorship. Meanwhile, whatever enabled avoiding this morning’s objective seems intent on producing a bigger detour up, first.

Market feeling heavy as it won’t leave its lows.

This morning’s bias environment trended straight down throughout. The window reversed from attacking recent 2388.75 highs, to probe under the 2383.50 overnight low down to this morning’s 2379.00 bias-down signal.

Did that relentless 9-point drop reflect optimism?

Perhaps. Mostly because this morning’s low stopped 2 ticks short of touching yesterday’s 2378.75 low. Yesterday’s pivotal low was touched. And if that was optimism, then there remains potential for an aggressive drop under yesterday’s lows — the capitulative leg described in the Market Tour.

This afternoon’s bias-down avoided signaling. It wasn’t even touched, despite still hovering at session lows. That’s a degree of optimism. Breaking the bias environment’s range prematurely isn’t unusual on Friday afternoons.

A bullish scenario would firm through the afternoon bias environment, whether or not to extend higher on its exit. Otherwise, approaching the bias environment’s exit around or under 2381.00 would remain vulnerable to accelerating downward into the close.

Corrective dip rallies hard off its target.

The first hour’s choppy ranging around 2385.00 had avoided triggering the 2388.00 bias-up signal. It had also avoided touching bias-up. An offsetting test of the 2380.25 bias-down signal wasn’t required.

But it was tested anyway. A single plunge pierced it by 3 ticks. It was probed by twice that after an interim bounce failed.

RSIs diverged positively into the lower low, just before noon. Trending up relentlessly through the noon hour probed the morning’s high. It peaked upon touching this afternoon’s 2388.75 bias-up target.

Meeting the target without renewing the bias-up signal doesn’t change that this is a bias-up environment. Extending higher is possible. Back under 2386.00 would signal at least a corrective dip targeting a retest of the 2383.75 bias-up signal.

Any deeper would extend the corrective pullback. Even if the correction has ended already, nothing requires resuming the rally today.

Headline politely waits for target to be met.

Not triggering the 2388.00 bias-up signal didn’t prevent testing its 2394.00 bias-up target, piercing it by 3 ticks. Drifting down had barely managed to violate the pullback limit when a headline triggered a slide to 2386.25.

Being a knee-jerk reaction to news, the drop is now being recovered. So far, up to 2392.00, a 61.8% retracement back to the high. And the high does require a retest, having originated from overbought RSIs.

That attraction above is competing with the instability of this morning’s rally. Yesterday’s rally gained no traction and this morning’s open didn’t gap up. So, extending higher anyway tends only to stretch the rubber band for a reversal down.

Back under 2386.00-2387.00 would start to signal that reversal underway. Meanwhile, there remains potential to retest session highs.

Gap up still inhibiting sponsorship.

This morning’s post-open bounce up to 2372.00 was eventually reversed to probe under the open’s 2367.25 low. By 6 ticks. The effort persisted through the bias environment lapsing, which fulfills the bearish WedEX’s minimum requirement.

But its influence on Monday morning wasn’t aggressive, which is likely when Friday afternoon’s influence is muted. Regardless, its influence has lapsed, and now price action is subject to other influences only.

The afternoon bias isn’t stepping into that role. It just triggered no-bias, without testing either signal, but attacking the 2371.50 bias-up. Probing any higher before the bias environment begins lapsing in an hour would be doomed to failure.

No-bias trending would be doomed, but it could meanwhile extend to test the 2375.00-2377.00 overnight highs. No such test is required, and resolving down remains possible.