Market Wrap

Tuesday’s wide, sideways choppiness had reflected sharply disparate opinion and no inhibitions to expressing it, i.e. a breakout waiting to explode in one direction or the other. The argument was won decisively Wednesday.

S&Ps down 100 points at the close, 108 afterward, to 2780.00. From Tuesday’s 2886.00-2888.00 close. From last week’s 2942.00-2945.00 highs. Back under January’s high, and testing June’s 2788.00-2798.00 “lower prior highs” as support.

Meanwhile, the next set of lower prior highs begins at 2749.00. The next consolidation’s 61.8% retracement is around 2721.00. And the next confirmation of anything bigger would be to close under 2709.00.

Of the “unfinished business” outstanding above — 2947.50‘s new Globex trend extreme, the high’s 2945.25 opening gap up, no-bias trending retracements at 2900.50 and now also 2838.75 — only Wednesday’s 2838.75 is currently relevant, being less than one day and one leg removed. Both of which can become moot soon.

June’s lower prior highs form the upper-end of the Complex Ascending Triangle we’ve monitored weekly for months. It eventual break to new highs was likely, and likely to be short-lived, and likely to be reversed back down, hard (as the index comparison’s context has been suggesting for weeks). Its hard reversal is also likely eventually to retrace the triangle, usually fully to its 2528.00 low. But not in a single leg. And possibly not without an external artificial rescue attempt offering another detour up.

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

Tuesday’s fluctuation around Monday’s close didn’t spend much time at unchanged. The morning’s two opposing trending attempts were never equaled intraday, let alone exceeded. But volatility persisted through the close. The market has widely opposing opinions and it is trying to express them all.

That’s usually the recipe for a exploding in one direction or the other. No traction was gained either way Tuesday afternoon. So credible trending Wednesday morning would begin by gapping pen.

Gapping up above Tuesday’s 2900.00 high, not, there’s room up to 2914.00 before signaling the trend has reversed up. Just closing above Friday and Monday afternoon’s 2895.00 highs would at least indicate a bottom has formed. Gapping down to and through Tuesday’s 2879.00 low would all but ensure retesting Monday’s 2866.00 low, and then probably also 2850.00.

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

Monday included two attempts to extend the decline from last week’s highs. Both were ultimately retraced back above prior lows — Friday’s 2873.25 low and Thursday’s 2887.75 low — but not back above a prior high. The nearest prior high is Friday afternoon’s last-minute attack on 2895.00. It was being attacked at Monday’s close, after the 2890.00 cash session close which was also Friday’s cash session close.

Big intraday recoveries, twice, but not yet reversed up.

Perhaps traction from Monday afternoon’s rally can reverse the trend up. Traction was gained by exiting the bias environment above the noon hour’s high and entering the final hour higher, then trending up through the proxy window. Overnight and/or Tuesday morning should trend up. I’ll want the confirmation of gapping up, since Monday’s session developed exclusively in negative territory.

“Unfinished business” left from Friday at 2990.25 remains outstanding. Add to it unfinished business below at Monday afternoon’s 2880.50 bias-up signal. Both are the product of no-bias trending that has yet to retrace. Each can be neutralized overnight, or left outstanding indefinitely. Testing the lower attraction first would be vulnerable to also testing 2867.75, and oversold RSIs at Monday’s 2866.00 low — and also vulnerable to extending the decline to 2850.00 regardless of unfinished business above.

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

Friday’s Employment Situation report had kept overnight action range bound, albeit a wide and choppy range. The flat 2906.00 open tried to resume Thursday afternoon’s recovery, only to reverse down from testing and retesting 2914.00. The first leg was shallow, and the second leg plunged to 2880.50 and then to 2873.25.

The afternoon’s bias-down target was 1 point lower at 2872.25, which is close enough not to become “unfinished business.” That allowed the balance of the afternoon to focus on unfinished business above, at the morning’s 2900.25 bias-down signal, whose break during the no-bias environment requires being retraced. The afternoon’s bounce came within 6 points before stalling.

Closing Friday under 2879.00 would have next targeted 2850.00, retracing the leg prior to the month-old rally. Holding its test through the close only prevents putting the next lower objective into play. Stocks are open as usual on Monday’s Columbus Day, but might not trade normally for the holiday, which is usually subdued. We’ll review paths at the Saturday Review.

Details and other markets coverage are discussed in the post-market Wrap recording here.
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Wednesday night’s drop to 2913.25 had recovered to greet Thursday’s open at 2924.00,. The open slid back under 2919.00 to prove the pre-open bounce wasn’t attracting reinforcements. That did not, in itself, point any lower. It only created the vulnerability to other influences pointing lower.

And those other bearish influences did not, in themselves point lower so quickly. Downside projections of 2901.00 and 2896.00 had no particular timing requirement. Meeting them so quickly (and the afternoon’s 2888.00 renewed bias-down target) only creates other vulnerabilities.

Price action was at least momentarily responsive to the relevant levels of 2901.00, 2894.00 and 2888.00, bouncing to 2905.00 into the final hour. Closing back above them suggests that selling pressure was fulfilled. Friday morning selling pressure would be the product of new sponsorship. And new sponsorship is vulnerable to being trapped.

So, a knee-jerk negative reaction to Friday’s payrolls report must still break a new relevant level to reflect strong-handed sponsorship. Which is entirely possible, and then entirely vulnerable to resuming the decline into the weekend. Absorbing an initially negative knee-jerk reaction could instead find Friday Factors triggering the short-squeeze that Thursday afternoon’s bounce tried to be.

Higher highs into the close up to 2908.00.50 recovered all of the relevant downside levels. The 2-week old 2907.50 prior low was still being tested, so we can’t be assured momentum had reversed up. The pattern remains vulnerable to a bearish reaction on Friday’s pre-open report, and to extending its bias through the noon hour.

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