Market Wrap

Never step in front of a new extreme on Friday afternoons. It has been some time since the market had the opportunity to teach that lesson. This Friday made up for that lost time by ticking up, up, up ahead of this weekend’s Brexit vote.

Oops, I mean the French vote. Which is being approached similarly to Brexit, which was held on a weekday. Price had ticked up relentlessly through the Globex open, until the first polling station reported results for Remain that were narrower than expected. Granted, the polls aren’t nearly as tight, (or tight at all). But a win by the market’s favorite son won’t necessarily be a win for the market. Excessive optimism is difficult to satiate.

Friday’s 2396.00 cash session close was 5 points above the week’s highs. Futures closed another 3 points higher at 2399.00. Both are above March’s 2391.00 prior high close, although only futures exceeded March’s 2397.25 high close. The high’s retest is likely to visit 2405.00, if not also 2415.00. Sunday night and Monday morning will be fun.

Details and other markets coverage are discussed in the post-market Wrap recording here.

I’ll send Saturday Review login instructions in the morning… See you there!

Did Thursday’s brief plunge to 2376.00 finally end the 6-7 day correction of last week’s rally? Its recovery back above the range’s lower-end didn’t extend above 2388.00. Wednesday’s brief plunge to 2375.50 resolved similarly, and didn’t end the correction.

Although Thursday’s low neutralized the requirement to retest Wednesday’s oversold RSIs, there are still attractions to it. Attractions that remain in-play without closing above 2388.00. Attractions that would be neutralized by gapping up above 2391.00.

Thursday’s open was offered a similar proposition, and tried exploiting it, but its gap up failed. At least Friday Factors of the weekend’s approaching illiquidity could leverage gapping up into a short-squeeze back to recent highs. And at least the weeks’ global liquidity challenges could prevent a retest of the week’s lows from extending.

Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

Wednesday morning’s drop to 2375.50 had never actually printed intraday during the current rally leg. Last Tuesday’s 2378.50 open had gapped 3 points above it, after closing 5 points under it. So, Wednesday’s low was the lowest print in more than a week. Last Tuesday’s 2378.50 open had since served several times as the range’s low.

Ongoing liquidity challenges had already made any probe of fresh lows likely to recover. In fact, it was recovered ahead of Wednesday afternoon’s FOMC policy statement. Oversold RSIs at the morning’s 2375.50 low make its retest likely. Reaction to the news was a 3-point surge to 2384.00, which the balance of the session only fluctuated around instead of extending, so Wednesday’s low could still be tested Thursday.

Closing Wednesday above 2388.00 would have sealed a bottom. Gapping up above it Thursday would still be credible for extending higher. But anything shallower remains vulnerable to probing fresh lows before the rally to new highs can resume.

Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

Was there a shortage of catalysts Tuesday for trending? Not early in the morning. Gapping up held a test of 2388.00, and plunged 7 points to test 2382.00. Was there no shortage of catalysts for being range bound? The balance of the session fluctuated in a 5-1/2 point range between the two early extremes.

We discussed this possibility during this weekend’s Saturday Review. Enough exchanges are closed globally to constrain liquidity, which inhibits trending. Quarterly earnings coming from AAPL didn’t prevent and afternoon slide, but probably inhibited it from breaking the morning’s lows.

Bouncing into the close stopped short of touching the noon hour’s high. That high had stopped short of touching the open’s high. And the afternoon’s interim dip had stopped short of touching the morning’s low. The resulting pattern is a Symmetrical Triangle, which depicts equally-matched opponents, and the potential for a false break before reversing more substantially in the opposite direction.

Gapping up high enough could break free from that attraction. Meanwhile, closing again under 2388.00 has kept the door open to at least probing fresh lows.

Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.

Was Monday’s pattern any different than Thursday or Friday? Each held shallow probes under Wednesday’s 2382.00 low. Each rejected early strength — or, in Monday’s case, early strength was only retraced. And each has yet to recover Wednesday’s last-hour slide.

But retracing Monday’s early strength was recovered (twice). And the afternoon was in recovery mode, attacking 2391.00. The only threat of fresh lows was if the recovery mode were to fail. So, is last week’s rally resuming? Gapping up above 2391.00 Tuesday would suggest so.

Monday’s late break lower rejected the probe above 2388.00. And the break closed under the morning’s 2387.50 recovery highs. The door to fresh lows remains every bit open as each session following Thursday and Friday. Fresh lows remain likely to be recovered, and fresh lows overnight could be recovered before Tuesday’s open.

Details and other markets coverage are discussed in the post-market Wrap recording here.

Monitor overnight Globex trading in the chaRTroom here.