Market Wrap

Two attacks no 1900.00 failed to break higher. Stopping pessimistically short of touching Friday’s prior highs suggests that any reaction down is only temporary.

So, reacting down into Tuesday’s final hour to 1988.00 is likely to recover. A late surge did recover up to 1997.00, but Crude Oil tumbling post-close has triggered 1988.00‘s retracement in sympathy.

Resuming the rally would next target 1913.00 and potentially 1924.00. Otherwise, while a deeper reaction down Wednesday is possible, extending any deeper would likely be only temporary.

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The final hour’s accelerated pace met 1869.00 as the 3:37-3:52 position-squaring window opened. Its support was still being tested as the window closed. Persistently oversold 3-minute RSI had left oversold territory, diverging positively on the 1868.00 low’s retest.

That’s a long way down from exiting the noon hour at 1895.00, or testing 1904.00 Sunday night. But it’s Wednesday’s recovery high, which had extended higher Thursday and Friday. And so long as 1869.00 holds as support, the recovery can still resume to probe 10-15 points above Sunday night’s high to 1915.00-1920.00.

But Monday afternoon’s decline gained traction, so avoiding fresh lows Tuesday morning requires gapping up — a lot. Gapping up a little would still be likely to probe under Monday afternoon’s lows, under 1869.00. But so long as 1856.00 doesn’t break during lower, the corrective bounce could still be productive.

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Exiting Friday’s bias environment probing fresh session highs usually marginalizes sellers for the day. An exception was possible if exiting the bias environment back under the afternoon’s 1895.50 bias-up target. It was being probed and overlapped during 2:30-3:00, but ultimately held. The dip from 1902.00 to 1892.00 was recovered to end the day back at the morning’s 1900.00 high.

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Trending back down Thursday afternoon was avoided, but the next likelier scenario was not to trend at all. So, the alternative was not to rally, but to range sideways into the close.

This was the result of having bounced back up to yesterday’s late 1869.00 high while the bias environment was lapsing. Combining that with no traction being gained, left the market hovering nervously with two days of illiquidity fast-approaches.

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Is it, or isn’t it? First of all, what’s the “it” — substantial corrective bounce, or durable bottom? Corrective bounce, maybe. But two “V” bottoms do not a durable bottom make.

Wednesday’s 2004.00 low reacted  up throughout the afternoon tested 1869.00. Does the relentless feel of the afternoon rally make the bottoming attempt any more credible than a shallow bounce? The low’s RSIs diverged positively, while the next lower objective was neutralized. Overbought RSIs left outstanding at the high help to ensure its retest. And traction gained by the rally should be rewarded Thursday morning.

But Wreversal Wednesday? Durable bottom? That’s not so reliable considering the rally probed only temporarily back above Tuesday’s low without holding it. Strong-handed buying would have closed above 1865.00-1868.00 having probed it, or else patiently avoided it and reserved buying pressure.

Traction gained Wednesday afternoon can be rewarded by probing higher Thursday morning, while remaining vulnerable to resuming the decline. Probing higher after gapping up to and through 1881.00-1885.00 would be less likely to resume the decline soon. Otherwise, already rejecting the final hour’s surge above 1840.00 back under 1834.00 would be a big step to resuming the decline already.

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