Pre-close View

Ineffectual optimism is the recovery’s biggest threat.

Despite a gap up, delaying its extension higher had suggested that buyers were weak-handed. They disappeared entirely when the 2055.00 renewed bias-up target was tested by 6 ticks by 10:15 instead of exceeded. The morning’s bias environment fell to 2041.75.

Despite that still being positive territory, delaying a recovery suggests that buyers are expending energy without gaining traction. The noon hour’s bounce tested the afternoon’s 2049.75 bias-up signal by 6 ticks but wasn’t triggered at 1:20. The afternoon’s bias environment fell to 2043.50.

Despite both the bias environment exit and final hour’s entry not gaining traction, fresh afternoon lows are being probed. Not fresh session lows — at least, not yet. In addition to those two instances of “ineffectual optimism” already neutralized, the gap back to Friday’s 2040.75 close has been threatened for quite a while.

The lack of traction may prevent extending down substantially before tomorrow. But filling the gap back to Friday’s close, down to 2039.00, is still likely today.

Morning’s trapped longs now adding downward pressure.

The noon hour’s low touched this afternoon’s 2038.50 bias-down signal and bounced 5 points to almost 2044.00.

Attacking and retesting 2038.50 through the bias timing window still didn’t trigger bias-down. So, the bias environment bounced 8 points to test 2046.00.

But the bias environment’s exit was slipping back into the noon hour’s range under 2044.00. And the final hour’s entry had returned back to the 2038.00 low.

This being a Friday afternoon, exiting the afternoon’s bias environment beyond all prior timing window extremes would trend in that direction through the close. I’m giving the same credibility to probing fresh session lows through the 3:10-3:20 timing window (now being probed down to 2036.00).

Probing any lower at this stage should probe a lot lower, initially targeting 2032.50 and potentially trending down sharply into the close. Back above 2040.75 would start to suggest that buyers have regained control.

Sellers gain traction for tomorrow.

This afternoon’s bias environment was exited under its 2032.50 bias-down target. Usually, probing under its 2038.00 bias-down signal after 1:30 during a no-bias environment would require retracing to 2038.00 at some point. But not if also trending under the 2032.50 target by 2:30.

That doesn’t prevent a bounce back to 2038.00 anyway. And it doesn’t prevent a durable recovery. But neither is required.

Meanwhile, the bias environment was exited under the noon hour’s low, and the final hour hour was entered under the bias environment’s low (testing 2026.00). Sellers have gained traction for their efforts. Regardless of price action for the balance of the session, tomorrow morning is likely to probe fresh lows.

Being entrenched, sellers are exploiting the opportunity to refuel by allowing a bounce up to 2032.50. Back under 2029.50 would signal the decline has resumed already, next targeting 2021.00-2022.00.

FOMC fallout resolves in reversal to fresh highs.

The afternoon bias environment contained the FOMC Minutes. The 2053.50 bias-up signal had been tested and retested by 1 point, at both 1:20 and 1:30, triggering noN-bias. Dipping into the news and out of it touched yesterday afternoon’s 2046.00 high as the bias environment began lapsing.

Touching yesterday afternoon’s 2046.00 high produced a bounce to 2057.00-2058.00.

Earlier today in the chaRTroom, I had described the significance of 2057.00 for being a singular representation of resistance.

2057.00 is the 61.8% retracement of the structure at Monday’s late consolidation. The structure contains higher prior lows. The structure’s prior low is 2057.00. And 2057.00 is the 61.8% retracement back to Sunday night’s highs.

While testing resistance above, there remains an attraction below at 2044.50. Being only obligatory support, bouncing from 2046.00 is only an obligatory bounce. It is likely to resolve down. Extending back above Monday’s highs first would set-up a more comprehensive top than we’ve been contemplating.

Probing fresh afternoon highs.

We all know the metaphor of a frog being cooked in a pot of water. Without sensing the temperature gradually rising, it’s too late for the frog when the water finally boils.

Today’s trading range has been that pot gradually warming. Its boiling point is reached upon exiting the bias environment at 2:30, and then entering the final hour.

After trending down relentlessly overnight and gapping down sharply, the market frog was quite complacent all day encountering only the occasional bubble. But now it is boiling.

Interestingly, the frog seems to know what may be coming. It’s trying to jump out of the pot, as the bias environment exit was probing above the noon hour’s 2043.25 high — still overlapping it, so not decisively.

Entering the final hour above 2044.50 would suggest the frog has jumped out in time to avoid becoming soup. A surge just touched 2046.00, and just need to hold up into the final hour. Otherwise, reacting down and back into the water would likely sink to the bottom of the pot under 2036.25.