Mid-day Update… Clash of the setups.

Isolation recovery vs. Rally rejection.

Trending up through the open above yesterday’s lows had isolated the probe under yesterday’s lows. This completed the Isolation setup, next likely to rally through the afternoon, probably into the weekend, and possibly out of it.

Meanwhile, the three-day old pattern of rejecting early rallies has resurfaced. This morning’s rally extended nearly 21 points from its open up to 2731.00, 49 points above last night’s low. The three prior sessions reversed their rallies to close back in negative territory. Today’s session has trended down since noon, probing under the 2710.25 opening low and 1 point under its 2707.75 post-open low.

That’s still 10 points into positive territory. But this afternoon’s bias-down environment hasn’t yet stopped trying to extend lower. Isolation can probe under the open, but not negative territory, which is the rejection pattern’s goal.

Back above 2718.75 would start to signal the afternoon pullback had ended. The Isolation setup should then crush the early strength rejection pattern, extending to fresh session highs. Otherwise, not fulfilling the completed Isolation pattern would be bearish, albeit less bearish than rejecting it back into negative territory, which would suggest the reversal from last week’s highs has resumed.