Market Wrap

Friday’s session didn’t include a capitulative leg. The morning’s 9-point decline was contained, so it doesn’t qualify. The afternoon only ranged flat-to-lower. And the session doesn’t qualify very well as retesting Thursday’s low. Friday morning’s bottom was too high, and the afternoon’s shallow lower low was too late.

So, a capitulative break lower remains possible.

Objectives below haven’t changed, the likeliest being  2374.00 and 2371.50. The residual downside could be neutralized instantaneously Monday by gapping down to fulfill either objective. Counter-trend sponsorship tends to find that very attractive, when an entire week lies ahead. Gapping up Monday could be credible for resuming the rally without any further pullback.

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

I’ll send reminder and links to this weekend’s Saturday Review early in the morning.

2388.00 had already established its relevance. Suddenly stopping Thursday afternoon’s rally further confirmed its relevance. Overbought RSIs that formed at the high require an eventual retest. That retest could help to resume the rally. Trying to resume the rally immediately Friday would be credible for extending higher, but also vulnerable to reversing down through the open.

Thursday’s lows also confirmed the relevance of 2379.00. Its break would extend the pullback, initially to test 2375.00 where its test would either hold to resume the rally to new highs, or else extend the pullback to 2360.00-2361.00.

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

Monitor overnight Globex trading in the chaRTroom here.

Wednesday’s open was greeted unchanged from Tuesday’s 2385.00 close. Trending narrowly avoided triggering the 2388.00 bias-up signal. But the bias environment firmed above it anyway. And then surged to test the 2394.00 bias-up target. It was all retraced by a knee-jerk reaction to news. Until the afternoon bias-up signal triggered, and its target was met to within 3 ticks. That also reacted down on another headline.

Headlines trigger weak-handed sponsorship. Whether coinciding with resistance, or leveraging a fulfilled target, the reaction is artificial. By preventing an organic reversal, its reversal is only temporary. Which probably delayed truly punishing the morning’s doomed rally. Breaking lower through the position-squaring window finally probed under the morning’s lows, and into negative territory.

Thursday may yet extend the reversal down. Two consecutive closes above 2375.00 have put into play new highs, so the rally can rest on its laurels. Briefly. There is no shortage of catalysts — Thursday’s econ calendar is busy and high-profile, albeit not very influential after the pre-open Durable Goods. The quarterly earnings tap is still flowing.

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

Monitor overnight Globex trading in the chaRTroom here.

Tuesday afternoon was almost identical to Monday. Exiting the bias environment above the noon hour’s high, but dipping into the final hour. Greeting the proxy window at fresh highs, but not trending higher through it. A relevant difference being that Monday’s proxy window already started dipping into the close, while Tuesday’s closing dip was delayed.

Almost identical. But identical enough? Similar setups that appear consecutively seldom resolve similarly. Tuesday’s resolution was up, or at least up without delay. Will Wednesday’s resolution be down? Up, only after a delay or detour? Regardless, gapping up would be less likely to extend, and likelier to reverse down, at least initially.

Meanwhile, closing above 2375.00 has put into play new highs. Subject to confirmation from a second consecutive higher close Wednesday — or, so long as a pullback holds 2360.00-2361.00 — the really that began last Monday is targeting 2405.00 and probably also 2415.00. The context of price action prior to last Monday suggests that the high’s retest will form a bigger top.

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

Monitor overnight Globex trading in the chaRTroom here.

Was the bearish WedEX’s influence mild? Post-open action and the balance of the morning trended down. The bias environment began lapsing at session lows. But it was only 6 points under the morning’s high, which doesn’t seem very aggressive. Of course, its sellers faced quite a headwind. Gapping up 20 points Sunday night and extending another 11 points higher. A lot of post-open buying was likely absorbed.

Regardless, the overnight rally neither inverted nor invalidated WedEX. And its influence lapsed by noon. Price action since that moment trended up 8 points to 2374.00, probing the morning’s high. But the opportunity to gain traction wasn’t exploited. Despite exiting the bias environment above the noon hour’s high, neither the final hour entry nor the proxy window trended higher. And that’s despite probing higher in the interim.

So, the big question is whether the 3-week old 2375.00 prior high will hold its test as resistance. It may yet be probed Tuesday morning. Or later, after a little deeper dip. Or, Sunday night’s test is all the retest it will get. In any case, closing above 2375.00 would be bullish, if not also being confirmed by a second consecutive higher close. And it may be the minimum requirement to avoid dipping to “lower prior highs” at 2348.00 and 2344.00.

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

Monitor overnight Globex trading in the chaRTroom here.