Pre-close View

Greeting the FOMC statement optimistically proved quite an understatement. Rallying to 1994.00 had reacted down only 2 points ahead of the news. And then it spiked up to 2000.00.

Then it spiked down and plunged to 1976.00.

That was really a test of the rally’s 1977.00 target which was met yesterday. Back above 1985.00 therefore put into play a test of the next higher target at 1996.00 — never mind that the spike up had already met it. In fact, 1996.00 has been retested.

There is on likely resolution to this pattern. Regardless, this being new trend highs, nothing today can signal the trend reversing down. And if this 1996.00 testing doesn’t contain the rally, then it will have potential for extending up to 2020.00.

The bias environment’s dip to 1975.00 was almost 9 points under the noon hour’s exit. That was the only consequence of not triggering this afternoon’s 1978.50 bias-up signal, despite having probed above it to 1983.75.

As if that consequence wasn’t limited enough, now the high has been retested. And the potential to 1985.00 has been fulfilled within 3 ticks.

Back under 1980.50 would signal momentum reversing down to fresh afternoon lows. But I would continue to caution against getting very bearish very quickly, because a lot of this is driven by expiration, which can have more staying power than sentiment.

The morning surged. Not throughout the bias environment, but the surge held up. The bias environment was exited with a last blip-down to 1956.00, which recovered up to 1962.00 during the noon hour. That formed a running correction.

Surging into a running correction is one thing. Surging into a running correction and then surging out of it is another. Those there stages are often followed by a fourth stage that plateaus.

Despite triggering its 1962.00 bias-up signal, this afternoon’s bias environment formed a plateau, while fulfilling its 1969.25 bias-up target. That’s four stages, and the fifth stage is very reliable for trending.

In which direction is a different matter.

Entering the noon hour above 1970.00 would suggest the plateau had given way to another rally leg. Back under 1966.75 would be likelier to retrace the running correction, or lower.

Probing 1970.00 10 minutes before the final hour osprobing 6 ticks above the plateau. It gets every benefit of the doubt. But back under 1966.75 would signal momentum reversing down instead.

Simply describing the bias environment’s exit as being under the noon hour’s 1941.75 high leaves a lot of price action unrecognized. Three surges during the bias environment originated from under the noon hour’s 1941.75 high. One probed up to 1944.75 before reversing back under 1941.75.

But each surge’s probe was retraced deeper and deeper. And the bias environment began lapsing under the noon hour’s 1941.75 high. That last dip reacted up momentarily 3 points from 1939.00 to 1942.00.

Just entering the final hour back above the noon hour’s 1941.75 high would suggest that sellers are marginalized. The balance of the session could still gravitate slightly higher from lack of selling. Regardless, not already probing above the bias environment’s 1944.75 high through 3:10-3:20 would remain vulnerable to extending down.