S&P
Mid-day Update… Backing-and-filling.
Opening surge being retraced.
This morning’s surge from its 2089.00 open to attack 2100.00 has retraced steadily into the noon hour’s exit at 2092.00. This action helps to confirm that the opening strength was fueled by weaker handed buyers fearing another runaway session.
Dipping through the noon hour need not recover, let alone resume the rally. Not today. Which leaves potential for a late-afternoon slide. Exiting the bias environment at 2:30 still in positive territory could at least undermine fresh lows, but not necessarily inspire a rally.
Nothing about this morning’s rally makes an afternoon slide any less likely. It was never the likeliest scenario. Nevertheless, still not extending higher by 2:30 would be vulnerable.
Look ahead: Economic Calendar – for Mon Jul 4, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: US markets are closed Monday for the Independence Day holiday. Globex opens normally Sunday and Monday nights.
Independence Day holiday
US Markets closed
Globex close
1:00 PM ET
Globex regular open
6:00 PM ET
Afternoon Bias
| FRI afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2107.25 | 2099.25 |
| …would target | 2113.00 | 2105.25 |
| Bias-down: under | 2098.00 | 2090.25 |
| …would target | 2092.25 | 2084.25 |
| Signal status: NO-BIAS | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 1:20, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 1:20 would be “no-bias,” and the bias signals should define the bias environment’s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 1:20 would invoke a grace period through 1:30 to trigger a late signal.
— “Late” signals don’t require testing the opposite bias signal, but it’s still likely.
4. Still testing the bias signal at 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Post-open Review… Good to the last pop.
Single-minded relentless rallying has come full circle.
A post-open overt rally effort was all but assured when the overnight dip had recovered back up to yesterday’s 2088.75 highs. This was all the more likely when their shallow pre-open probe hovered narrowly around 2090.00 — that restrained optimism, or pessimism, was bullish from a contrarian perspective.
And that bullishness was soon realized.
The open surged to consolidate above the 2092.50 bias-up signal at 2094.00. Resolving up has extended to the 2098.25 bias-up target. The bias-up signal wasn’t renewed, but fresh highs are being probed anyway to attack 2101.00.
Last Thursday’s 2089.75 lower prior highs have been probed through a relevant timing window — entering the bias environment. The recovery’s reward is to probe Thursday’s 2019.50 prior high. Creating this upside objective has entrenched the rally, which allows it to safely refuel by dipping.
No other refueling opportunity this week has been exploited. Today’s “Friday Factors” introduce vulnerabilities, but don’t require a different resolution to the recent pattern. And those vulnerabilities didn’t prevent already probing through last Thursday’s mid-day congestion around 2098.25.
One of those Friday Factors is the tendency for afternoon ranging or backing-and-filling. Early trending can be exacerbated by afternoon orders being shifted forward. I doubt there’s much appetite left for getting long up here, but there still may have been a lot of short-covering. Regardless, we’ll soon see whether yet another relentless rally can still be so single-minded.
Pre-market Tour (recording & summary)
The overnight recovery from Europe’s opens has tested 2091.50. The open is being greeted at or above yesterday’s 2088.75 highs. Triggering bias-up would get every benefit of the doubt for extending higher, even if only through the morning. That said, there is extra potential ahead of the three-day holiday weekend for sellers to exploit early strength and/or early weakness.
Details and other markets coverage are discussed in the pre-market Tour recording here.