Market Wrap

Friday’s gap down held Tuesday’s ~2626.00 low through the open and bounced. Friday’s mid-morning low held a retest of Tuesday’s low by 3 points, and bounced again. Not only one, but two tests of a relevant support, and both tests holding. Usually on Fridays, the “try, try again” setup only traps its sponsorship into a bigger bounce through the close.

Except that Friday’s second test of Tuesday’s low failed before the bias environment lapsed. Sellers were the stronger-handed. Two noon hour opportunities to prove otherwise — which Friday Factors always allow — weren’t exploited as the balance of the session trended back down to prior lows attacking 2597.00.

A hold-short was compelling, other than it being over a weekend and not just during daily maintenance. The bigger picture discussion in this weekend’s Saturday Review defines the risk and potential reward.

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

Thursday’s session has the appearance of trending down. That’s understandable, being comprised of a series of lower lows and lower highs. The open’s quick surge up to 2675.00 was reversed down through the afternoon bias environment’s 2641.25 low. Trending, yes, but also an entire session of overlapping leg after overlapping leg.

Trend, or backing-and-filling? More so the latter, holding a test of the gap back down to Tuesday’s 2642.00 cash session close.

So, Thursday’s session isn’t very predictive. Except that filling Tuesday’s 2642.00 gap could be a dip too many — since two proxies for the gap at 2662.75 and 2655.00 were already tested, and influential. But any dip can still be recovered, so long as it’s not maintained through a relevant timing window.

A relevant timing window, like Thursday’s close. Which was struggling to hold 2655.00.

Immediately recovering 2662.50 through Friday’s open would be the next available signal that the decline from Wednesday morning’s 2690.50 high had ended. Its objective would be to resume the rally. Almost any delay in recovering would keep alive the vulnerability to retesting recent lows.

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

Extending the rally to its next higher objective at 2687.00 Wednesday would largely depend upon unbridled optimism. This was in contrast to the prior session, whose unbridled optimism only inhibited buyers from reinforcing the move, and attracted counter-trend sellers. Attacking the 2678.00 prior high to within 3 points was retraced to 2661.50 support, and then recovered to trend — more like trudge — higher. The 2687.00 target was met to within 3 ticks and its attraction was neutralized.

Breaking back under the 2681.00 bias-up signal during the bias-up environment extended down to its 2658.25 likely target as the bias environment began lapsing. Finally breaking lower as the proxy window lapsed extended down to the next lower potential target at 2650.50. None of which would have been likely had the bias-up target not been neutralized first. Still, retracing 2681.00 is likelier than not.

The rally’s next objectives would be 2702.50 and 2725.25. Dipping deeper overnight probably must recover before the open for the rally to extend higher. Otherwise, while not necessarily a striaght shot down, the next lower attraction at 2620.00 probably shouldn’t be revisited unless the intent were to resume the decline.

NOTE: Coverage will roll forward at Thursday’s open to the Mar (H) 2019 contract, which trades at a 4-point premium to Dec (Z) 2018.

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

Monday’s binary template allowed a bottom to form from probing under October’s low, but Monday afternoon’s rally stopped short of signaling momentum had reversed up. A second-day confirmation was acceptable, even if that included a post-open dip of backing-and-filling through the morning. Its only condition was to keep alive excessive optimism, preferably by holding above Monday’s range.

Coinciding with more rhetoric than actual developments in the China trade war, Monday’s range was probed in the morning. A less optimal knee-jerk reaction down failed only dug deeper into the afternoon, probing under overnight lows. The late bounce back up through Monday’s late high came early enough to not be labeled a correction —  only to dip back down into the close  and put the burden of proof back on buyers.

The binary template is viewing Monday’s afternoon-overnight bounce as a correction before resuming the decline. That’s a big correction. Oversold RSIs outstanding from Monday’s low meanwhile welcome a retest. And there’s no bullish reason to retest that chart point. There’s always a path higher, but anything short of another overnight rally would be a less than optimal start.

Details and other markets coverage are discussed in the post-market Wrap recording here, which was held an hour before the close.
Monitor overnight Globex trading in the chaRTroom here.

Sunday night’s gap down had extended to a 23-26 point probe of negative territory, half of that under Thu-Fri’s lows. Eventually recovering it all for a pre-open probe of positive territory up to 2645.00 still reacted down in time to greet the open slightly negative. And soon, greatly negative. The morning’s 2583.00 low probed 20 points under October’s 2603.00 prior low.

Oversold RSIs left outstanding at the low didn’t prevent the balance of the session from reversing back up. The 2645.00 pre-open high was probed by 3-4 points before the close, and positive territory held its recovery. The close maintained the afternoon’s trending series of higher highs and higher lows.

Monday’s likeliest template was binary. Either the decline would resume, or another bounce would begin. A probe under October’s low was likely, regardless of its resolution. So, apart from the new unfinished business below needing to retest the low’s oversold RSIs, a bottom may be forming.

But one very important condition has yet to be met — closing back above a prior high. Even recovering a prior high through an entire timing window. Friday’s 2652.00 prior high was only attacked. Meanwhile, exiting Tuesday’s open under Monday afternoon’s 2615.00 low could form a “session-long decline” setup. That would incidentally invalidate Monday’s recovery, and probably also end the week sharply lower.

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