Much more important is that Thursday afternoon’s 2920.00 high was recovered through the close. A new rally leg may not be underway, but retesting last week’s 2961.25 high may be in-play.
Avoiding a deeper meltdown Monday largely depended on holding above 2892.00-2894.00. It could have been probed if recovered during a relevant timing window. But only its upper-end was touched, and only by the session’s first minute. The balance of the morning trended up to 2924.50.
The afternoon’s no-bias environment restrained itself from breaking higher until coming within view of lapsing. Then its 2922.50 bias-up signal broke higher with a vengeance. The next higher candidate for correcting the recovery was tested at 2934.75 before entering the final hour. Fluctuating equally around 2934.75 up to 2938.25 reacted down to 2932.00 before the close.
No new “unfinished business” was left outstanding. The gap back up to Friday’s close doesn’t require being filled. But just avoiding a reversal down — which is not at all assured — would confirm new highs are in-play.
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The afternoon’s 2951.75 target was left outstanding. Resistance along the way to it at 2950 (+/-) would be more predictive than influential, meaning that the resolution to its test would be more influential than it would fulfill buying pressure. Above the 2950.00 area would target a retest of 2956.00, and there’s little reason to even visit it other than to break higher. Unfinished business above remains outstanding at 2961.75, which could be tested up to 2969.00.
Any downside with a greater purpose than backing-and-filling would require gapping down sharply — at the very least, under Friday’s 2931.50 post-open lows. Any less weaker weak open would likely be only temporary backing-and-filling intent upon recovering to fulfill the above paragraph’s objectives.
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The 13-point post-open corrective bounce wasn’t Thursday’s only rally effort. Neither was it the largest. But it did make it easier for another effort to succeed, having tested and retested 2930.00-2934.00, so another retest would likely break higher. Even then, 2936.00 must be recovered through a relevant timing window, preferably 2940.00. Next higher objectives would be 2950.00 (+/-), 2956.00, and a retest of the 2961.25 “new Globex trend extreme,” probably up to 2969.00.
Meanwhile, trending is difficult overnight ahead of an Employment Situation report. The impending event probably caused Thursday afternoon’s narrow sideways ranging. Not much support exists below. Possibly at 2892.00-2894.00, although it was already tested overnight there weeks ago. Any lower would target 2846.00-2851.00.
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Monday’s “unfinished business” above at 2954.25 had been met overnight, but it was also Wednesday’s open. A couple of big downlegs eventually touched 2943.50 at the noon hour’s low — stopping optimistically short of Tuesday’s unfinished business below at 2941.50. Down 20 points from the overnight high, and still showing signs of optimism.
Greeting the FOMC policy statement from just above 2949.50 was likely to extend in that direction, and returned to the morning’s 2956.00 high. Despite probably being only obligatory resistance, it was still resistance. And its test coincided with the Fed Chair’s Q&A, which evoked quite a different sentiment — reacting down 17 points to 2939.00.
A compelling hold-short would have been considered on a close under 2935.00 with the likelihood for gapping down to 2919.50. But the close had dropped already to 2924.50, reversing the odds. Post-close action has already extended down to 2916.00.
A lot can happen overnight. Recovering 2930.00-2934.00 would be big, but a retest of Tuesday night’s highs requires recovering 2949.75-2950.50. If this were Friday, then extending down sharply intraday would be very likely, but it’s at least still possible. There’s room down to 2910.00-2911.00 without yet falling over the edge, but it’s a very difficult level to recover from.
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All of which could have been reversed had the overnight bounce to 2945.50 been maintained. But its reaction greeted the open too low and the overnight low’s retest eventually resolved down sharply to 2926.00.
Monday’s “unfinished business” above at 2954.25 would seem to be in another universe at that point. Unfinished business was created below on oversold RSIs at the morning’s 2926.00 low. None of which prevented the morning’s bias environment exit from surging back into the 2935.00-2940.00 post-open range. Or from probing above the afternoon’s 2941.50 bias-up signal, despite already triggering no-bias.
AAPL’s post-close earnings is probably responsible for hovering at the afternoon’s 2947.00 bias-up target — despite not triggering bias-up, and being no-bias trending. And now a last-minute surge to 2950.50 has extended sharply higher to 2956.50 in reaction to AAPL’s favorable earnings reaction. AMD did well, too.
Unfinished business above is neutralized. Extending the rally Wednesday morning will be difficult ahead of the afternoon’s FOMC events. Potential to back-and-fill is likelier than actually reversing the trend down. Extending higher would next target 2969.00.
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and exiting the open under the 2939.00 Earlier Globex Low would have been the snap back down. But the pre-open test of 2939.00 was recovered before the open, negating the bearish setup.
Triggering the morning’s bias-up signal had left its 2950.50 bias-up target outstanding, but the noon hour neutralized it. Triggering the afternoon’s 2946.75 bias-up signal left its 2954.25 bias-up target outstanding. Attacking it up to 2951.50 didn’t prevent a late-afternoon drop back down to the morning’s 2944.50 bias-up signal as support. And lower through the close to 2941.75.
The session barely closed positive, but it closed positive. Anxiousness ahead of GOOGL’s post-close earnings was probably the culprit behind inhibiting the afternoon’s rally. Well-deserved inhibition, as GOOGL plunged 73 points just minutes after my pre-open update noted Monday’s suspiciously late bounce to 1293.00. That’s now history, and fully discounted by the market.
Tuesday’s econ calendar is very heavy with plenty of reports, and Wednesday’s calendar is very weighty with FOMC events. The quarterly earnings onslaught continues, and this stage continues shaping a different profile than the first round of reports.
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But the knee-jerk reaction to GDP had surged to 2932.00. Then its pre-open retest was reversed back down into the overnight range anyway. That’s the normal consequence of breaking an overnight range within 60-90 minutes of the open.
Sellers were attempting to trend on a Friday morning. They failed, so they became marginalized. Separately, holding tests of both the 2919.50 and 2924.50 bias-down parameters put into play offsetting tests of the 2934.00 and 2940.75 bias-up parameters. They weren’t required because the rejection was late, but their tests were fulfilled anyway.
“Unfinished business” from prior sessions at 2942.00 and 2942.75 was also fulfilled by Friday’s last-minute surge to 2942.75. Surging earlier might have qualified as a new trend high close on a Friday, but this came too late, so new new unfinished business was created.
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That’s a lot of volatility. Buying and selling pressure don’t offset each other, they expend themselves. Similar to Tuesday morning’s surge, although not required, the afternoon ranged narrowly. Perhaps Thursday afternoon’s ranging was due to more pre-earnings anxiousness, with AMZN and INTC reporting post-close.
Thursday afternoon’s range broke lower, but not until coming to within 3 minutes of the cash session close, which got to 2928.00. That extended another 2 points when INTC missed and guided down, reacting down sharply and erasing AMZN’s initial knee-jerk reaction up.
The second half of quarterly earnings is underway, and tends to be different from the first half. Probing fresh highs remains likely, but is getting less likely to be maintained.
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- An entire session without immediately retracing Tuesday morning’s rally helps to suggest the rally will resume. Immediately retracing the rally could have recovered, too, but less often. Meanwhile, a deeper retracement is still possible, but with a greater likelihood of recovering.
- Not even piercing a fresh high, if even touching a high, reflects pessimism. Ineffectual pessimism, for not having reversed down. Pessimism is potentially bullish from a contrarian perspective.
- Both bias-down signals held their tests to avoid triggering, which puts into play offsetting tests of their bias-up signals. In addition to Tuesday’s 2942.75 unfinished business, only Wednesday morning’s 2942.00 remains outstanding, since the afternoon’s 2937.50 bias-up signal was attacked to within 3 ticks by Wednesday’s late-afternoon high.
Perhaps anxiousness ahead of post-close earnings like FB, MSFT and TSLA prevented attracting strong-handed buyers to sponsor another upleg. The same influence could have prevented backing-and-filling deep enough to find strong-handed buyers below. It’s really irrelevant, other than to get the event(s) behind the market so its pattern can play out.
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Despite triggering bias-up, there was no afternoon momentum either way. The balance of the session ranged narrowly sideways between 2934.50-2938.00. The 2942.75 bias-up target becomes “unfinished business.” And regardless of the afternoon’s hesitation, the session formed a breakout from a multi-session range, still needing a second consecutive higher close Wednesday to confirm.
Meanwhile, S&P Cash came within 4-5 points of its ~2841 Sep 21 high. Futures were trading at a 5-6 point premium, now equivalent to 2646.00-2647.00. There’s no reason for the market to have come this close without intending to probe higher, although the path there is never assured. Sentiment is like an iron, and currently its optimism is hot. Expect the rally to strike it, unless a more powerful pessimistic sentiment heats up for whatever reason.
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