Market Wrap

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Wednesday was pretty volatile for an inside day. So was the overnight action preceding it. Both contained round trips that at first dived sharply, and then recovered entirely. Which defines Tuesday intraday pattern, sliding 25 points down to 2722.25 and then recovering back to the morning’s high.

The overnight action was shallower, dropping 11 points before recovering into the open. Which had initially surged before collapsing 14 points to touch Tuesday’s 2722.25 low. Its recovery was quick, and quickly peaked within 1 point of the post-open surge up to 2735.50. The post-open collapse had triggered bias-down, and confirmed it with fresh lows between 10:15-10:30. Its 2720.25 becomes “unfinished business.”

Nothing about an inside day requires that it resolve within any specific time frame, or even that it resolve first in either direction. Similarly, nothing about an inside day undermines the underlying trend, which in this case is targeting 2751.00. But a rubber band stretch down or else a gap up are the fastest ways to resume trending.

Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.

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Tuesday afternoon’s rally was premature. It originated during the bias-down signal, from under its 2728.50 bias-down signal, requiring its eventual retest. That didn’t prevent probing the morning’s high by 3 ticks up to 2737.75. The high held its test, and its reaction violated a pullback limit. But momentum didn’t reverse down.

The rally’s adjusted 2751.00 target and its room for noise up to 2757.00 remain in-play. But not upside momentum after a late dip violated the latest pullback limit. So, no hold-long, despite the attraction above. And no hold-short, despite the “unfinished business” below at 2728.50 (which can be neutralized overnight, and often also retraces the 1:20 print which was 2725.50).

Because Tuesday morning’s range contained essentially all of the afternoon, opening under Tuesday’s 2722.25 low could launch a more developed pullback.By the same token, avoiding an immediate break under Tuesday’s low should allow the rally to extend, possibly without delay.

Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.

Friday’s open was preceded by the monthly Employment Situation report. Its reaction had surged 12 points back up to Thursday’s 2709.00 high. The volatility was deceptive, itself preceded by a relatively narrow overnight range. Even that was contained within Thursday afternoon’s range. So, trending beyond the range wasn’t likely, especially if not done early.

If we can’t have trending, then at least we want to know it’s unlikely. Still, we gave trending one opportunity, which the first hour tried by probing fresh highs up to 2716.00. The bias-up signal even triggered — late, but the 10:30 grace period contained fresh highs to confirm. Although that makes the 2719.50 bias-up target more reliable, the balance of the Friday instead returned back into the earlier range.

We knew with greater certainty that trending intraday wasn’t likely. Nevertheless, the morning’s reaction down was recovered enough at the bias environment exit for the unmet bias-up target to become “unfinished business.” And the second consecutive close above 2701.00 confirms the rally’s next higher objective at 2756.00 is in-play. None of which prevents an interim detour with room down to 2656.00-2666.00.

Details and other markets coverage are discussed in the post-market Wrap recording here.
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Thursday’s open was greeted by two potentially bearish setups, the Globex-flip and the Too-late to break. Globex-flip formed by maintaining the open back under the 2681.75 earlier Globex low. But it never confirmed back under Wednesday’s 2674.25 last relative low. And the Too-late setup’s reaction back to the overnight range wasn’t rejected. Sellers didn’t exploit the setups.

The rally’s sponsors smelled blood in the water and swarmed, launching a rally up to 2708.00 by noon. The rally’s next higher target at 2701.00 was met. The balance of the session ranged flat-to-lower down to 2693.00, perhaps inhibited ahead of the post-close AMZN earnings and anxiousness ahead of Friday’s pre-open Employment Situation report. Late comments regarding China trade negotiations triggered a surge attacking 2708.00 through the close.

Closing above 2701.00 puts into play the next higher objective at 2756.00. Thursday’s late surge was early enough to have recovered 2701.00 before coming within 3 minutes of the cash session close. But the late surge was a headline reaction, so a second consecutive confirming close is vital. Reacting down has room to 2656.00-2666.00 before starting to signal the rally is ending.

Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.

CORRECTION: My early departure on Friday has been delayed by one week. This week will finish out normally.

Wednesday’s rally began somewhat impatiently, probing overnight above 2648.00 before the 1-2 hour false break window. The 2653.00 open wasted no time fulfilling the bias-up target, which was 2653.00. And its post-open pullback to 2647.00 recovered into a 20-point rally into the noon hour.

The only signs of patience was in the FOMC’s policy statement. By then, defensive posturing had pulled back to 2655.00, and correcting the morning’s excessive optimism created room for more. The news reaction surged 29 points to 2684.00, and the Fed Chair’s Q&A extended that to attack 2690.00.

The final hour dipped to 2674.25, and ranged narrowly into the close. Perhaps inhibited ahead of MSFT and FB post-close earnings. Reacting favorably to their beats similar to AAPL enabled futures to firm up to 2683.00, also inspired by NQs surging.

Closing above 2666.00 from under 2656.00. puts into play 2701.00 (subject to a second consecutive higher confirming close Thursday, which could already fulfill 2701.00). Or, not. Having closed above 2666.00, gapping down under 2656.00 Thursday would reject Wednesday’s upside momentum.  The 1-1/2 week-long Ascending Triangle only probed higher, but ended the day only overlapping its prior high — vulnerable to reversing down.

Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.