Market Wrap

Expiration has likely exacerbated the rally’s productivity. Yellen’s testimony and Trump’s fiscality were only catalysts. The rally’s breakout was broad-based and organic, but now five days later it is more influenced by the mechanics of expiration.

Wednesday duplicated Tuesday’s opening weakness and intraday recovery to new highs in the afternoon. More so, the afternoon bias environment’s highs were probed during the final hour. The three prior sessions gapped up and extended higher only to an afternoon bias environment high. And Wednesday produced the rare double occurrence of no-bias trending.

So, optimism is improving through the day instead of waning, which is potentially bearish from a contrarian perspective. Also, the rally’s sponsorship is increasingly event-based, much more temperamental than organic accumulation. And weak-handed sponsorship is impatiently pushing the afternoon’s higher.

Gapping up again Thursday would once again be vulnerable to a morning of backing-and-filling, as would gapping down — the afternoon’s rally above its 2342.25 bias-up signal was no-bias trending that requires being retraced, potentially down to its 2341.00 1:20 print. Extending higher relentlessly anyway would next target 2366.00 — and if met Friday morning, the bullish WedEX could invert down.

Meanwhile, the WedEX signal triggered actively bullish, easily. Price action is likely to be biased up into and out of the weekend, Friday afternoon and Monday morning. Thursday’s open won’t be able to affect the setup in this particular instance.

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

Monitor overnight Globex trading in the chaRTroom here.

A blow-off is underway. It’s not just four consecutive higher closes from the previous range. Or that three of those gapped up and all of them probed higher during the afternoon. Those elements reflect optimism, but not necessarily extended optimism or impatience.

The blog-off indication came after Tuesday’s close. It really began at the final hour’s entry, when a pullback from 2335.25 had dipped 4 points, but no deeper. Retracing the entire dip into the cash session close then extended post-close to attack 2338.00. We haven’t yet seen a post-close short-squeeze, until now.

There’s little to no chance that the trend extreme has printed. Or that reversing down into Wednesday’s open would not soon recover. But opening under Tuesday afternoon’s 2331.00 bias environment low would start to reject the rally above it. That would be especially bearish near-term if only fresh highs are probed overnight.

Regardless, a pullback has room down to 2327.00 and 2324.50 while being only temporary backing-and-filling. Extending higher first would next target 2343.00-2344.00.

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

Monitor overnight Globex trading in the chaRTroom here.

Friday’s new trend high close and breakout confirmation have already satisfied their requirement for an eventual higher close. And closing under 2327.00 after probing above it does suggest upside momentum is waning. So, reversing down soon is very possible.

But reversing the trend down immediately isn’t very likely. Not without first neutralizing overbought RSIs at the 2329.00 high. Also, Monday afternoon’s 2331.50 bias-up target became “unfinished business above.”  It was not invalidated back under the 2325.75 bias-up. Not decisively, being overlapped slightly into the final hour. And not durably, recovering from a slightly lower dip.

A pullback has room for noise down to 2322.75 or 2321.50 just as noise. A deeper pullback should find support down to “lower prior highs” at 2313.00. Even then, the gap back to Monday’s 2319.00 opening print would want to be filled from below. Any lower would suggest a much deeper correction has begun.

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

Monitor overnight Globex trading in the chaRTroom here.

There is no Saturday Review this weekend. So, the market Wrap included a bigger picture review. Please don’t hesitate sending me any questions or chart analysis requests, which I’ll respond to over the weekend…

Thursday’s breakout was confirmed by Friday’s second consecutive higher close. At least a third higher close is likely eventually. At least one more higher close is required also due to a new trend high close on a Friday. The two setups are unrelated — not all breakout confirmations are on Fridays, or at new trend extremes. So their shared requirement is exponentially more reliable.

None of which prevents immediately launching a pullback. A corrective retracement, temporary before recovering back up to and through Friday’s 2315.75 high. But not necessarily avoiding a dip to 2304.50, 2297.00, or deeper.

Overbought RSIs at Friday’s 2315.75 high require a retest. The afternoon’s 2316.75 bias-up target remains outstanding. Testing either Sunday night would be vulnerable to reversing down. Exceeding both through Monday’s open would likely extend to test 2327.00-2330.00.

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

Again, this weekend’s Saturday Review is cancelled. The chaRTroom will re-open Sunday night with Globex… Enjoy the weekend!

[Market Wrap was held one hour earlier because I am away from the screens for the final hour.]

A surge exited the afternoon bias environment probing above its 2306.00 resistance. But only to attack 2308.00 before hesitating. Extending higher would next target 2311.00 and potentially also 2327.00. But more importantly, a final hour reversal down would be avoided.

Trending up to fresh highs through the 3:10-3:20 proxy window would be optimal for today’s rally gaining traction. If not, then extending higher tomorrow morning would all but require gapping up again.

Reversing down today need not collapse, but it could. Extending higher tomorrow morning need not persist into the afternoon, but it should. Being a Friday, the morning’s bias tends to persist through the noon hour. In the market Wrap recording I briefly touched on the challenge and meaning to this pattern closing higher on a Friday.

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

Monitor overnight Globex trading in the chaRTroom here.