Market Wrap

Friday morning’s gap up did everything needed to suggest it was headed higher. Everything, meaning nothing. Simply maintaining a gap up above all prior highs through the open tends to marginalize sellers for the morning. Actually, Friday’s gap up also extended higher during the opening 15 minutes of volatility, which was helpful confirmation, but not necessary.

Friday afternoon did nothing, too. But its only predictive value is in it being a new trend high close. On Fridays, that requires eventually there to produce another new trend high close. Not necessarily immediately, but eventually. So, an interim pullback is possible.

An interim pullback is also likely. One reason is the multi-week range that is likely to abruptly reject probes above it. A second reason is that Friday’s high satisfied the only outstanding attraction above by retesting last Sunday’s Globex trend extreme. Which informs the third reason for probably not extending higher Monday — since that highest outstanding objective was only neutralized, but held as resistance through the close.

Or, not. We’ll discuss the potential upside, whether momentary or extended, at this weekend’s Saturday Review. Join us at 9:30 am ET, its link will be emailed overnight.

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

Thursday’s gap up above Wednesday’s tractionless rally enabled the rally to probe higher without bearish consequence. And there wasn’t much consequence to probing higher, as an 8-point reaction down was recovered entirely. But the recovery wasn’t exploited, as anxiousness ahead of Friday’s Employment Situation report restrained trending attempts.

The payrolls report is being greeted from 2158.00-2159.00 without any traction either way. So, maintaining a gap open Friday beyond either end of its 2154.00-2164.00 range would be likely to trend in that direction. If down, then unfinished business below would be in-play at 2150.50 and 2141.50. Any rally would be likely to extend to retest Sunday night’s 2177.75 “new Globex trend extreme.”

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

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Wednesday had formed an Ascending Triangle. It was unlikely to break higher because it appeared around Tuesday’s highs, during Wednesday morning, when probing above Tuesday’s highs had required gapping up Wednesday morning.

The Triangle could have broken lower, but that attempt ended as the bias environment began lapsing at 2:30. The reward was fresh highs up to 2158.00-2159.00, largely produced by the close.

The break higher came too late to gain traction. Gapping up Thursday could extend higher anyway, targeting a retest of Sunday night’s 2177.75 “new Globex trend extreme.” Otherwise, greeting Thursday’s open already in decline would still target a retest of Tuesday’s oversold RSIs at 2141.50.

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

Monitor overnight Globex trading in the chaRTroom here.

Tuesday’s close was testing Thursday’s 2153.50 low. Remember Thursday’s low? Its test became required after Friday’s probe above Thursday’s highs, despite Thursday’s rally not having gained traction. Retracing Thursday’s rally was the consequence to probing above it prematurely, and now that consequence is neutralized.

Anyway, Thursday’s low has held its test through the close. Its test wasn’t rejected, which would have required closing back above another relevant level. But a lot of extra selling pressure was expended down to 2141.50, and absorbed.

Retesting 2141.50 through Wednesday morning can’t be dismissed, especially with oversold RSIs there requiring it eventually — and especially if not already rallying pre-open. But maintaining a gap up could instead become focused on retesting Sunday night’s 2177.75 high before resuming a much larger decline.

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

Monitor overnight Globex trading in the chaRTroom here.

A “new Globex trend extreme” at the 2177.75 overnight high was left outstanding Monday. It is almost historically mandated to be retested intraday before a durable downleg can begin. Meanwhile, a sizable downleg is possible.

Despite Monday afternoon’s flat-to-higher narrow ranging, the next lower objective would be to retest Thursday’s 2153.50 low. By the same token, because of Monday afternoon’s flat-to-higher narrow ranging, not already trending down into Tuesday’s close would make the 2177.75 retest likelier, first.

But nothing changes whether greeting the week with extreme sentiment can easily be a sentiment peak. And nothing changes that its intraday reaction down wasn’t rejected. The burden of proof is back on buyers.

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

Monitor overnight Globex trading in the chaRTroom here. Contact me immediately if you encounter any difficulty.