Market Wrap

Monday’s gap down was less than 2 points under Friday’s 2577.00 low. And the first post-open action probed it down to 2570.75. But not down to the 2567.25 overnight low, and not for long, before recovering 2577.00 and never looking back down. Of course, while preoccupied with not looking back down, the recovery attempt was having difficulty getting past the open’s highs.

Opening selling pressure was brief and optimism was impatient, two errors the recovery attempt made. More prolonged post-open weakness, not necessarily deeper, would have struck a bullish balance between pessimism and optimism. That could have launched a bigger recovery, instead of struggling to attract reinforcements.

The ongoing range now becomes more dependent on 2571.00 support where 2567.00 had been critical previously. Meanwhile, the range becomes more vulnerable to simply collapsing into a new downleg, instead of first probing fresh highs at 2606.00 or higher.

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Ultimately, Friday’s session offered nothing predictive or insightful to the bigger picture. It was an Inside Day, and almost exclusively developed in negative territory.

The pre-open setup we had anticipated and discussed during the Market Tour did develop, albeit slowly. Waiting so long to break the overnight range proved unable to extend, recovering back into the overnight range.

The morning’s bias-down triggered, but held tests of its 2581.00 target down to 2577.00. The bias-up signal’s resistance broke higher as the bias environment lapsed. But only to briefly fill the gap back Thursday’s 2594.00 futures close by 2 points. Another dip coming out of the noon hour was too late to trigger bias-down. Bouncing from there eventually filled the gap back to Thursday’s 2596.75 cash session close.

Nothing about Friday’s session indicates the uptrend has ended and that 2606.00 can’t be tested soon. By the same token, nothing indicates much momentum to extend through its room for noise up to 2626.00, or to maintain any intraday probe of fresh highs. And being an Inside Day, let alone shallow, gapping down under its afternoon low would be disqualified from forming a reversal setup.

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Thursday morning’s bias-down signal triggered after a post-open dip to had probed 9 points under the bias-down target to 2562.00 — still above the 2560.50 overnight low, and all well below Wednesday’s 2582.50 and 2586.25 closes. Also, all well below Wednesday’s 2569.00 low, failing to form a bullish Isolation setup.

But the morning rallied anyway, testing the window’s 2679.00 bias-down signal as resistance. And probing it, filling the gap back to Wednesday’s 2582.50-2586.25 closes, and testing the morning’s 2590.75 bias-up signal where any higher would have invalidated the bias-down environment. But another dip was required, and it got to 2573.50 before resuming the rally to close back at or above Wednesday’s 2596.75 high to finally isolate the overnight/open’s failed reversal attempt.

The rally’s next higher objective at 2606.00 remains intact, somewhat likelier to include its room for noise up to 2626.00. None of which prevents another interim dip, although it should be limited to 2581.00 to be brief, or to 2567.00 to be recoverable.

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Closing above 2548.00-2555.00 Tuesday had put into play the next higher objective at 2606.00. Tuesday’s session-long rally setup had suggested that Wednesday morning would probe higher. Already having probed higher overnight, a couple of setups could have reversed the morning down, but they failed. So, the open’s gap up to 2583.00 extended higher.

Until it didn’t.

The open got up to to test 2590.00 where rumors, tweets and headlines triggered a reaction down similar to Tuesday morning. But Wednesday’s was relatively shallower, 21 points to test the 2569.25 bias-down signal’s support.

Its reaction resumed the rally to fresh highs through the noon hour up to 2595.50. The FOMC Minutes reaction triggered a surge attacking 2597.00. And the balance of the session ranged choppily sideways back down to 2580.00.

More unfinished business was left outstanding by oversold RSIs at the morning’s 2569.00 low. Add that to Tuesday’s tab from its oversold RSIs at 2547.25. Eventual retests of both are required. Which probably have to wait for the 2606.00 objective to be met (with room up to 2626.00) as the current string of shallower and briefer pullbacks suggest that the bounce must end before downside objectives can become attractive.

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Tuesday’s gap up above Monday afternoon’s 2567.50 high formed a session-long rally setup. Immediately collapsing 34 points to test Monday’s 2550.50 close down to 2547.50 seemed to dash the setup. Interestingly, with the morning’s bias environment being the one exception, all other timing windows probed their prior timing window’s high. So, if that’s considered a successful setup, then Wednesday morning should probe above Tuesday’s highs.

The intraday recovery did recover the open’s 2576.00 gap up. Its attraction would have been left outstanding to inhibit or at least question any interim decline. But now that is neutralized.

Meanwhile, closing above the 2548.00-2555.00 range puts into play 2606.00. Closing back under the range Wednesday would not confirm the higher target, and would also reverse the trend down. Until then, the burden of proof is on sellers.

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