Pre-close View

Plunging out of the bias environment.

Fridays are unpredictable enough already. Now today’s choppy sideways ranging has been blind-sided by a 24-point plunge during the bias environment’s last half-hour. And that extended to 32 points during the 3:10-3:20 timing window.

Regardless, Friday afternoon price action is not predictive ever. But it can undermine or simply not confirm setups that are in development already.

For example, today’s original challenge was to maintain a recovery above Tuesday-Wednesday’s “lower prior highs” and above 1938.00. That was created by rallying overnight. Now the challenge is in avoiding a close under 1918.00.

Closing above 1918.00 wouldn’t reinforce yesterday’s recovery above it from under 1899.00 — but at leas it would not invalidate its recovery. Closing under 1918.00 wouldn’t be predictive of extending down, and could be rejected by gapping up Monday, but there’s nothing bullish in it.

I’ve just described in the chaRTroom that this situation is very blinding. The plunge had no history to it that even hinted at its vulnerability, whether for being so deep or so durable. Friday afternoons are Friday afternoons, but clearly holding long into the weekend has become considered to be a very risky strategy.

Rally off of the morning’s target has gained traction.

We’ve come a long way from the morning’s test of its 1899.00 objective. The final hour’s entry had just probed 1926.00.

We’d come a long way already from this morning’s open under 1918.00, which put into play 1899.00. Not to mention the likelihood for testing it this morning.

And now there’s potential for coming even further tomorrow. The bias environment’s 1916.00 exit at 2:30 was above the 1913.00 noon hour’s high, and the final hour’s 1924.00 high was above the bias environment’s 1917.00 high. Buyers have gained traction.

Closing above 1924.50 would help to avoid any interim dip before rewarding today’s buyers tomorrow morning. But having probed already above 1924.50 does make that a little less relevant.

If this setup can’t hasn’t been improved significantly by noon tomorrow, then it’s probably because a much bigger decline has developed.

Decent-sized swings continue within the range.

The only concern we discussed during the pre-market Tour about today’s session was the likelihood it wouldn’t trend. That was an important topic, since rallying 31 points overnight from low-to-high was teasing at extending.

In fact, several relatively sizable swings have developed intraday. One no-bias environment after another hasn’t convinced price action to sit still. And they’ve mostly been predictable — including the afternoon’s no-bias trending above its bias-up signal, and its required failure.

That requirement below has been fulfilled. We had expected that any trending today would develop late-afternoon, if at all. It’s late-afternoon. Extending above 1930.00 would target an attack on 1935.00. Extending any higher through 3:10-3:20 would reflect buyers gaining traction.

Otherwise, no further trending-like behavior is required today — there would be vulnerability to retesting the afternoon lows, but no predictive signal.

The bullish scenario emerges.

The 1918.00 objective was barely touched as the afternoon’s bias environment got underway. The bias environment back-and-filled up to 1924.00 repeatedly. The next hour widened its range, but not its action.

Then the last half-hour was finally squeezed. Surging from 1924.00 to 1935.00 is now probing into the open’s range. Closing within it would form a potential Island, and gapping up Wednesday above 1938.00 would seal a near-term low.

Participation will be thin due to Yom Kippur worship. Trending after not gaining traction intraday depends upon gapping open in one direction or the other. Since the break under 1938.00 is ending where it began, its rejection would be more able to trend than would gapping down.

It’s time to see what this market intends without that influence.

This afternoon’s 1954.50 bias-down signal triggered. Actually, it was already probed during the noon hour. And not by a little. Its 1948.75 bias-down target was probed down to 1944.25.

Before Friday’s open, we were keying off of that area to determine whether the overnight plunge was done. (It was.) Both tests launched bounces. Today’s bounce to 1957.00 probed above the bias-down signal during the bias-down environment.

Groundwork has been laid to avoid resuming the decline. The noon hour’s low filled the gap back to Friday’s 1946.00 cash session close which neutralized its attraction below. Two buy signals triggered during its reaction up to 1957.00.  The bias environment retested this afternoon’s 1948.75 bias-down target as support.

Now the bias environment is lapsing. Back under this afternoon’s 1948.75 bias-down target could undo the groundwork laid by the recovery attempt. Otherwise, back above 1954.50 and preferably also above 1957.00 could target fresh session highs above 1969.00 today.

Note the Falling Wedge / running correction that preceded the low, plunging into and out of it. We’ll be discussing it during the post-market Wrap…