Market Wrap

Plunging 12 points to Thursday’s low was not produced by strong-handed sponsorship. It was in reaction to a headline. And it was likely exacerbated by anxiousness ahead of Friday’s Employment Situation report.

Recovering the entire slide into the close was not produced by strong-handed sponsorship, either. Anxiousness ahead of Friday’s Employment Situation report kept price range bound, with plenty of room to bounce.

But new “unfinished business below” was created at the 2351.00 low’s oversold RSIs. And “unfinished business above” remains outstanding at 2374.50. “Lower prior highs” have been tested yet again, and this time recovered to close positive.

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

Monitor overnight Globex trading in the chaRTroom here.

The ES front-month rolls forward at Thursday’s open to Jun, which is trading at a 3.00-3.25 discount to Mar. So, Tuesday night’s low touched relevant support at 2356.50 (basis Jun, 2359.50 basis Mar).

Wednesday afternoon’s dip touched the morning’s 2360.75 bias-down signal, which had become “unfinished business below” that morning. Tuesday morning’s unfinished business above remains outstanding at 2374.25. The next higher objective would be to test last Wednesday’s 2378.50 opening gap up. Retesting last Wednesday’s high would have room for noise up to 2402.50.

Extending higher from this pattern remains possible. Less possible Thursday than it was Wednesday and Tuesday, which had closed back within their prior sessions’ lows. Wednesday did not, instead trending down to 2357.75 before the close. However, overnight lows held the late attack.

Having trended down essentially into Wednesday’s close, gapping up Thursday above Wednesday afternoon’s ~2369.00 bias environment high could form a “session-long rally” setup.  is meanwhile chipping away at the support of “lower prior highs.” Another fresh low at 2354.25 could still be absorbed through a timing window’s exit. But that’s so far from optimal, it might as well be a sell signal.

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

Monitor overnight Globex trading in the chaRTroom here.

Tuesday’s gap down held the bias-down signal to create an attraction above. After absorbing the anxiousness of an event in London, a steep rally attacked the upside attraction. But the 2374.75 peak stopped short of its 2377.50 objective before correcting. And correcting. And correcting.

A pullback to 2370.75 could have ended the correction, but it was probed down to 2365.00 when the bias environment began lapsing. The balance of the afternoon ranged sideways up to 2372.00. Until the last half-hour, which slid to the next lower objective at 2364.00-2365.00.

A lot of time has been spent in decline since last Wednesday’s high. And thanks to the height of that high, a lot of selling pressure has been expended only to test the prior week’s “lower prior highs.”

Of course, that was true enough after Monday’s close, but the selling didn’t stop. And Monday’s close back above the morning’s high didn’t prevent extending down Tuesday. Gapping up is still a credible path higher — and much likelier Wednesday than it was Monday, since “unfinished business” is no longer below. But if the decline is attracting new sponsorship Wednesday, then it should break quickly under 2359.50.

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

Monitor overnight Globex trading in the chaRTroom here.

What should have happened Monday, did, whether to end the pullback or to extend the decline. Unfinished business below was neutralized at 2372.25 and 2368.50. Potential to lower lows was rescued by exiting the bias environment high enough.

What could have happened for extending the decline did not happen, since all unfinished business below is neutralized. And what needed to happen for reversing the pullback may have begun. The afternoon’s rally gained traction by exiting the bias environment above the noon hour and then trending to fresh highs through 3:10-3:20.

Monday’s close was still negative, but that’s not necessarily bearish. Last Tuesday’s negative close reflected a vacuum back up to unchanged, which was leveraged into a gargantuan rally. After recovering 2381.50, extending higher would encounter resistance on the way to objectives at 2404.50 and 2418.00.

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

Monitor overnight Globex trading in the chaRTroom here.

Friday Factors helped to set a floor Friday morning. The open’s 3-point surge to 2282.00 was reversed by a 7-1./2 point plunge that attacked overnight lows to within 2 ticks. We know that recovering from a probe under the overnight low would form a more credible bottom. But that didn’t entice Friday’s fickle sponsorship to maintain control.

The morning’s 2372.25 late bias-down target became “unfinished business below.” Recovering to within 2 points of the open’s 2282.00 high suddenly found great volatility between 2276.00-2281.00. But the overnight and post-open decline’s never resumed. The balance of the session blipped-up to and slightly through 2281.00, where the session closed.

I describe in the Market Wrap video why the pattern suggests that even the most bullish resolution will likely be preceded by a fresh low. That fresh low may be isolated to the overnight. It could take longer if the 2372.25 bias-down target’s delay has made 2368.50 or 2364.00 likely, too. Of course, gapping up Monday above 2288.25 would suggest new sponsorship has arrived already.

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

Join us for this weekend’s Saturday Review at 9:30am ET in the chaRTroom. Reminder links will be sent early-morning.