Market Wrap

Three distinct probes above Thursday’s 2499.00 high each reacted back into negative territory Friday. Each reaction down was on the precipice of reversing the trend down, but held.

A lot of buying pressure was expended to counteract the last reaction down. It was testing the afternoon’s 2482.00 low before entering the position-squaring window at 3:37. Already having probed a fresh high, there was no unfinished business above requiring a retest. So, Monday’s likely resolution is either to compensate for Friday’s delay by gapping down, or else for a gap up to probe fresh highs.

Gapping down could extend, if not collapse, as the market realizes two things: 1) that everyone has been front-running themselves to already deploy quarter-end and year-end purchases, and 2) that the recovery from Tuesday night’s 2317.00 low has been a temporary bear market rally. A slightly higher high testing 2525.25 would be preferable before reversing down, but not necessary. Gapping up could soon fulfill 2525.25, and either reverse down from there or else extend to the next higher bounce potential at 2548.00-2556.00.

Details and other markets coverage are discussed in the post-market Wrap recording here.
THERE IS NO SATURDAY REVIEW THIS WEEKEND.

Wednesday’s record-setting rally had tried resuming overnight. Its 22-point down to 2455.50 was recovered to probe a fresh high up to 2481.50. But that failed, and Thursday’s open was greeted by a bounce from 2422.50. The post-open recovery attempt failed, too, getting up to only 2445.00 before eventually resolved down to attack the afternoon’s lowest target at 2396.00.

That ended the correction of Wednesday’s rally, as anything lower would have returned to new lows. The reward for ending the correction was to probe fresh session highs above 2445.00. That was doubled, attacking 2499.00 through the futures close.

The 9-day series heading toward an Up/Down-Crash setup is now invalidated by Thursday’s second consecutive up-session. Which doesn’t require trending up. But resuming and extending the rally Friday would next target 2525.00 and potentially 2606.00. Resuming the decline anyway would be unlikely from opening only slightly weaker Friday.

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

There’s no unfinished business below.

• Monday’s low had fulfilled the decline’s next lower objectives at 2361.00 and 2345.00.
• Tuesday night’s opening plunge testing 2317.00 didn’t qualify as being a “new Globex trend extreme” requiring intraday retest, due to the singular nature of its leg, and its later retest holding the noise range.
• Wednesday’s post-open surge to 2387.00 reacted down and filled the gap back to Monday’s 2352.00 cash session close, neutralizing its attraction.
• Holding tests of both morning bias-up parameters overcame the rejection by entering the noon hour above its 2372.50 bias-up target.

Two intraday behaviors signaled that buyers were stronger-handed than sellers:

• Monday’s 2352.00 cash session close held a test through Wednesday’s post-open dip, and another before the bias environment began lapsing.
• Printing fresh session highs during the afternoon bias environment wasn’t reversed back under a prior low before entering the final hour.

Does Wednesday’s 161-point rally from Tuesday night’s low already reward buyers for absorbing sellers? Too much, too soon, to extend higher immediately? Regardless of the upside vulnerability that facilitated it, Wednesday’s last intraday upleg is no different in principle than Sunday night or Tuesday night’s opening plunges which created extremes. And Wednesday is the first session gain for the decline beginning Dec 13, day-9 of what may be an Up/Down-Crash setup that would be timed to resolve this week.

Closing positive Thursday would at least invalidate the Up/Down-Crash setup. But this bounce has room up to 2525.00 and 2607.00 without yet qualifying as more than a temporary correction. I’m still reluctant to pronounce a bottom forming without there first being a capitulative session. Or, two — and Wednesday’s rally doesn’t limit this week’s vulnerability to that.

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

HAVE A MERRY CHRISTMAS!

Reminder: I’m away from the screens Wednesday morning, but chaRTroom will be open.

Monday’s early hours was the rare Christmas Eve session worth trading. Two signaled downlegs were very productive, and the next lower objective started being tested.

Sunday night’s rally up to 2434.50 reflected optimism, but not the same “hope springs eternal” optimism as last week. It was more a relief that Sunday night’s gap down had been relatively shallow, and relatively brief. Which is no more valid or credible for reversing momentum up. So momentum reversed back down, sharply, probing the Globex open’s 2401.00 low by 10 points.

The post-open drop to 2368.00 was recovered entirely to a fresh post-open high at 2412.50, but fresh lows were being attacked by noon. And then extended through the close, probing the objective’s 2345.00 lower-end down to 2340.50.

Fulfilling the decline’s next lower objective doesn’t equate to being a buy signal. It doesn’t even necessarily mean the decline is slowing its pace. Europe has yet to process this drop — the last we saw of them was retracing a relief rally. Wednesday’s chances are almost even for being either a capitulation session, or another hopeful bounce.

Details and other markets coverage are discussed in the post-market Wrap recording here.
chaRTroom will re-open Christmas night with Globex at 6:00 PM ET.

A very narrow overnight range had dipped only slightly down to 2467.00 before Friday’s open. And only briefly, quickly bouncing back to earlier overnight highs testing 2492.00. The range persisted through the open, until optimistic headlines from a Fed speaker triggered a surge to 2508.00. Surges have been serving only one purpose, to stretch the rubber band so it could snap back down. It eventually snapped down to new lows at 2409.25.

The bearish WedEX’s afternoon influence is likely to repeat on Monday morning. Except for the impending weekend’s illiquidity, a hold-short was compelling. Evaporating liquidity ahead of a 3-1/2 day weekend also makes the setup less compelling, as one gentle upward push could trend higher through Monday’s early close.

Meanwhile, the bigger picture continues to unfold, whatever its scapegoats. Notice the accompanying chart. We began focusing on the bearish topping pattern long before tariffs and government shut-down were whispers, let alone headlines. The decline’s real culprits are the massively extended levels of many high-profile stocks long before they hit their highs. They were widely owned, by funds run by really smart inexperienced managers (i.e. theorists). How did the decline not begin earlier, and how is it not down more?

Be aware that a near-term low can appear at any time. Also be aware that a near-term low can be under Friday’s close by triple digits. And finally, be aware that none of that will happen during the next two days. Take advantage of the pause… chaRTroom will re-open Sunday night at 6:00 pm ET.

Details and other markets coverage are discussed in the post-market Wrap recording here.
THERE IS NO SATURDAY REVIEW THIS WEEKEND.