Pre-close View

Afternoon bounce is at critical point.

Opening weakness had an opportunity to hold a test of yesterday’s unfinished business below 2097.75 and then bounce to the 2106.00 area. The objective’s noon hour test has now bounced to 2106.50.

Bouncing to the 2106.00 area this morning would have produced a new downleg, being early enough to attract counter-trend sponsorship. Testing it this afternoon could extend higher, as shorts cover before the nearing close.

The bounce is testing higher prior lows at the lower-end of yesterday afternoon’s bias environment. Recovering its resistance would resolve in a retest of yesterday’s 2110.75 high. Meanwhile, the bounce’s failure would target not only fresh lows, but also launch a new downleg, leaving no unfinished business above.

Poised at the highs, waiting for another shoe to drop.

The burden of proof remains on sellers, having failed to regain traction. No matter how suspect the upside action, holding above relevant support through relevant windows does not equate to reversing momentum down.

Probing fresh session highs into new timing windows is bullish. This afternoon’s bias environment started lapsing back at 2118.00. That’s an appropriate time for productive sentiment to be more reliable. Optimism was producing fresh highs, so the burden of proof on sellers is only greater.

Not that buyers have exploited that burden. The final hour was entered back at 2118.00 — not yet trending up, despite a blip-up to 2119.75.

Back under 2117.00 would suggest that stronger sellers have arrived. Their objective continues to be fresh session lows, and deeper. Otherwise, extending higher would be attracted to 2120.25 and 2122.25, if not also 2125.25.

Gradually reacting down from the highs.

This afternoon’s noN-bias signal didn’t enhance volatility. But the bias environment has lapsed, without maintaining a probe above the noon hour’s 2117.25 high.

The final hour’s entry was piercing the bias environment’s 2115.25 low. And now the 3:10-3:20 timing window is trending to fresh afternoon lows at 2113.50. Sellers are gaining traction. After fulfilling and holding tests of any upside attractions. By a premature rally that had originated from an unstable base.

That last item’s consequence should probe negative territory. That’s another 5-6 points lower. And usually that’s just the beginning. Closing above the bias environment’s 2117.00 high might be the only remaining possible bullish signal.

Afternoon probing fresh highs.

Delaying the decline’s resumption today was unlikely. The morning’s 9-point post-open rally to 2109.00 might have seemed enough productivity, but the effort created a higher objective at 2110.75.

After retracing all of the post-open gain in reaction to Yellen’s noon hour comments, that higher objective attracted price back up to fresh highs at 2112.25.

2110.75 was being overlapped while the bias environment lapsed from 2:30-3:00. So, the next higher objective at 2116.00-2119.00 isn’t necessarily in-play. But neither is it rejected.

Back above 2112.00 would signal the next higher objectives are in-play. Meanwhile, a pullback has room down to 2107.25-2108.50 before suggesting a deeper pullback is underway.

It’s not positive territory, but it’s positive.

We’ll review the bigger picture at today’s post-market Wrap since there is NO Saturday Review this weekend. Please join us in the chaRTroom by 4:03 ET.

This week’s intraday patterns have shared a common trait of recovering from initial dips. And despite plunging 23 points from the 2106.00 pre-open high down to 2082.75, the pattern remains intact by having recovered at least to 2101.00.

2101.00 was the next relevant resistance above the afternoon’s 2099.00 bias-up signal, once the bias environment began lapsing. Its attraction kept alive momentum long enough for the rally to gain traction by exiting the bias environment above the noon hour’s high, and then by entering the final hour even higher.

Despite the rally gaining traction, a pullback could extend down to lower prior highs at 2093.75-2095.50. Resuming the rally today would target a probe above the 2106.00 overnight high, i.e. new highs. And being a new trend high close on a Friday, the uptrend would be entrenched for at least one more new trend high close.