Market Wrap

If Monday night”s highs are retested now… then not immediately reversing down could probe substantially higher. Fast. The eventual consequence would be bearish — emphasis on the word “eventual.”

Pattern points… (Setups and technicals)
After Tuesday”s close, I noted here that already there were elements conducive to a Wreversal Wednesday. In fact, Wednesday produced all of the setup”s other elements, with one exception: the Wreversal.

A morning spent backing-and-filling was exited at fresh post-open highs. That recovery extended several minutes past noon, filling the gap back to Tuesday”s 2036.50 close. Then ended. For the day.

Sellers never regained traction. Deeper and deeper reactions repeatedly recovered back to 2036.50 resistance, which held. The reactions down were pessimism, and recoveries made them ineffectual. But there has yet to be a consequence (higher highs) for the “ineffectual pessimism.”

Buyers didn”t gain traction, so higher highs aren”t assured. Entering every relevant timing window Wednesday under 2035.00 undermines upward momentum, too. But so long as 2033.50-2034.25 holds as support, at least a retest of Monday night”s 2039.00 “new Globex trend extreme” remains likely.

What”s Next… (Outlook and opportunities)
Still not trending up at Thursday”s open? Dipping more than just a little? Then upside attractions will have been overcome by the vulnerability to at least correcting the rally back down to 2011.00. Starting that dip after retesting Monday night”s high would be unlikely to hold 2011.00, or to be only a temporary correction.

If not for the Veteran”s Day slowdown… then would the open”s slide have extended more deeply? Would its recovery have retested the overnight highs? Yes, and yes. And no. Low volume environment”s inhibit sponsorship, and make trending more difficult to stop. So, either scenario could have developed, or both. And still may, on Wednesday.

Pattern points… (Setups and technicals)
A surge 2 minutes before Tuesday”s close reached 2036.50. It had originated from at or under 2035.00, which is at or under Monday”s high. Still being in the process of testing Monday”s high, no higher target is put into play. 

Also, the range for noise up to 2039.50 remains intact. That”s above Monday night”s “new Globex trend extreme.” Its retest remains in-play. Closing Tuesday within its orbit makes the retest easier, and likelier. 

The trend change warning from Monday afternoon remains outstanding. The vulnerability to reversing down sharply remains alive. And one leg probing under one or two prior session lows remains likely.

What”s Next… (Outlook and opportunities)
The Wednesday Wreversal setup hasn”t appeared in awhile. It begins by trending normally through much of the morning, only to reverse more substantially through the balance of the day. Intraday trending has been absent during much of this rally leg, so we”ll be suspicious if it appears now.

If repeatedly probing new highs every day can”t trend otherwise… then is there really any new sponsorship being attracted? Thursday”s session trended up, after recovering its opening dip. But the day before only gapped up, the day after ranged sideways, and now Monday has a 10-minute surge to its name.

Pattern points… (Setups and technicals)
“Suspended in disbelief” might describe the current market. The suspension refers to its recent pattern of a morning surge that ranges flat or flat-to-lower through the close. Only last Thursday was different, and then only after absorbing an opening drop.

The disbelief refers to sellers. Surely, there is selling pressure, and it is equally responsible with buyers for the narrow ranging. Equally responsible, and equally measured. But apparently, the lack of intraday follow-through isn”t enough to convince them to overwhelm buyers, and to reverse the trend back down.

That might end very soon. Monday”s last three timing windows traded exclusively above all prior intraday highs, without extending higher. That”s more of a timing tool than pricing — whether the recent rally from last Tuesday morning”s low ended at Monday”s high, or will extend a little higher momentarily. But if not soon reversing the trend down at least to retrace 61.8% of the rally (to 2010.00), then the next trend will be up, more steeply.

What”s Next… (Outlook and opportunities)
Room for noise around Monday”s 2034.25 close is 2025.50-2039.50. Extending higher first would make its reaction down likelier to break under the noise range”s lower-end. Testing the lower-end, first, could recover but need not.

then what energy will be left to extend higher when the threat has passed?

Pattern points… (Setups and technicals)
More news Friday about Russia rolling into Ukraine. But it wasn”t disseminated via headline through the open, like other Rusiian-Ukraine news on Thursday. Also like Thursday, perhaps the overnight highs would have been retested and extended if not for the news.

After recovering the post-open dip, the noon hour and bias environment ranged narrowly sideways. Even without another headline, simply the fear of yet more Russia-Ukraine headlines on Monday inhibited extending the recovery. And when the bias environment began lapsing defensive posturing pressured price back down to the morning”s 2022.00 support.

A last-minute bounce recovered the late dip, but sellers gained traction for the effort. The afternoon bias environment was exited under the noon hour”s 2027.00 low, and the final hour was entered under the bias environment”s 2026.25 low.

Since sellers gained traction Friday, rallying immediately Monday would require gapping up. Maybe the Russia-Ukraine situation will resolve over the weekend. Any shallower opening strength is likely to fail.

What”s Next… (Outlook and opportunities)
Friday”s pre-open 2033.00 highs formed a “new Globex trend extreme” that requires being retested intraday. Room for noise extends up to 2039.50. But since Friday”s close was not a new trend high, probing higher highs Monday morning wouldn”t preclude there being an afternoon reversal down that launches a more substantial decline.

If not for another Russia-Ukraine headline… then could Thursday”s rally have met its target early enough to already be rejecting it into the close?

Pattern points… (Setups and technicals)
Thursday morning”s 2028.25 bias-up target was never put into play. The open was ambushed by Russia-Ukraine headlines that overtook the pre-open attack on 2027.00. The afternoon bias environment held a test of the bias-up signal. Neither of which prevented extending through the close to 2028.25.

Buyers gained traction for the effort. The bias environment was exited above the noon hour”s high and the final hour was piercing the bias environment”s high. Fresh highs are likely intraday Friday, so long as a gap down is avoided.

Having trended up into the close, gapping down enough could form a session-long decline. Thursday afternoon”s low was the bias environment”s 2021.50 low. So, maintaining a gap down under it would be vulnerable to trending down through the morning. Friday”s Employment Situation report could spark that degree of selling pressure.

Gapping down wouldn”t necessarily for a durable high — the gap back to Thursday”s close would want to be filled. Meanwhile, not gapping down, or not gapping down enough could extend higher to 2039.50.

What”s Next… (Outlook and opportunities)
Friday”s pre-open Employment Situation report is highly reliable for generating a reaction. But not necessarily trending. That”s a function of the Friday Factor, with two days of illiquidity fast-approaching. Regardless, the morning”s bias signal tends to persist through the noon hour.