Market Wrap

Monday morning’s reaction to gapping down and testing 2899.00 had gravitated back up to being unchanged from Thursday’s 2908.50 close. The afternoon only ranged narrowly around 2908.50, finally breaking free in its last half-hour. But even then the surge to 2912.75 was mostly retraced, essentially leaving an “inside day.” Regardless, the late internal breakout attempt may prove valid, if confirmed by extending higher Tuesday without delay. Otherwise, the pattern probably cannot tolerate much more than the slightest, briefest pullback, if only to attack Monday’s 2899.00 low. Extending higher would target fresh highs at 2926.50-2928.00.

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

Intraday distribution remained alive and well going into Easter/Passover weekend. We wouldn’t know this, if not for optimism also being alive and well, repeatedly gapping up or rallying into big selling pressures. Thursday’s 22-point rally from overnight lows was retraced by 17 points not long after the session’s first hour.

But without even one reversal sustaining a lower low, there remains potential to probe yet higher highs. Wednesday’s 2923.00 gap up, and room for noise up to 2926.50-2928.00 don’t require being tested, but they are attractions so long as sellers haven’t retaken control.

Sellers failed to take control Thursday morning, and not for lack of trying, which told us to expect the drop’s recovery. Which it was, to within 1 tick at 2911.50. The window re-opened for sellers to try again, but they didn’t, as price ranged choppily sideways around 2910.00 into the close.

The week’s final afternoon didn’t provide optimal confirmation to the bearish WedEX. Neither was it invalidated, as price ranged sideways through the afternoon. Trending down through the first half of Monday’s opening 15 minutes of volatility would get a benefit of the doubt for trending down aggressively through the morning.

Have a very happy Easter and Passover… chaRTroom will re-open Sunday night at 6:00 ET.

Details and other markets coverage are discussed in the post-market Wrap recording here.
NO SATURDAY REVIEW THIS WEEKEND DUE TO THE HOLIDAY.

Was Wednesday a massive paradigm shift? That might seem to be the message being sent by the 19-point collapse from its 11-point gap up. But the the impending 3-day weekend’s illiquidity could be as much of a catalyst, exacerbating the ongoing intraday distributive pattern. Regardless, collapsing from 2923.50 down to 2904.50 before the 10:15 bias timing window is bearish behavior, as much as extending down to 2898.50 through the afternoon’s bias environment. But the burden of proof is on sellers, either to maintain the reversal into Thursday or to absorb an intraday bounce.

Their chances are mixed. One reason for carrying the burden of proof is that outside days like Wednesday often expend more energy than they can sustain. That could be neutralized by a morning bounce before retaking control in the afternoon. Also, the expiration week WedEX signal was bearish — passive bearish, having held tests of resistance. The setup still requires afternoon weakness to confirm, which could also fulfill the burden of proof.

Already trending down overnight would find “lower prior highs” offering significant support at 2892.00-2894.00. Already bouncing would find only sporadic resistance at 2911.00 and 2914.50 before fresh highs become likely. Any early support or resistance test before the weekend can be very predictive for the afternoon pattern.

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

Paraphrasing, “Behind every higher high there stands a gap up.” Lately, at least.

Tuesday’s gap up was the product of relentless overnight trending. Often enough, intraday reinforcements aren’t attracted to replace the relentless overnight trend’s retiring sponsorship. Similar to the overnight trend’s two higher highs that were retraced to their origins, Tuesday’s gap up to 2919.25 was retraced to pierce 1 tick under Monday’s 2910.00 close.

That was the minimum structural likelihood for a reversal. A calculable objective at 2908.50 was probed down to 2904.50 when plunging into the position-squaring window. Its reaction recovered to test Monday’s 2910.00 close — which was still being overlapped up to 2912.00 at the close. So, in addition to maintaining the pattern of selling intraday bounces and gaps up, overnight rally gained no traction for its effort.

Meanwhile, the Dow outperformed ES again overnight, extending its overnight rally to within one hour of the open, while ES continued ranging sideways. Dow also outperformed when the afternoon collapse barely pierced the morning’s low, while ES made decisively fresh session lows. However, NQs also outperformed both ES and the Dow, neither of which probed fresh post-open highs as did NQs. So, day-two of the comparison wasn’t equally bearish, but we’ll be extra interested on Wednesday ahead of this week’s expiration.

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

Relatively narrow ranging Sunday night persisted right into Monday’s flat open. That turned out to be false advertising, as a decline suddenly began. The morning’s 2906.00 bias-down signal was attacked to within 1 tick to avoid triggering, but it was broken through 10:30 to be invalidated. Sellers were rewarded down to 2900.50, where oversold 1-minute and 3-minute RSIs will require an eventual retest.

The open’s collapse still stopped short of touching last week’s “lower prior highs” at 2898.00 and lower. So, bouncing out of the noon hour retested Friday’s 2910.00 gap up, but the bounce wasn’t qualified to neutralize its attraction. Friday’s dip was also too shallow. Impatient buyers are often rewarded, but not by nearly as much as anticipated. So, a fresh high remains vulnerable to rejection.

Meanwhile, there was glaring divergence among S&Ps, the Dow, and NDX. The Dow probed Friday’s highs Sunday night, while ES held within 1 tick, and NQs didn’t come close. Yet each opened essentially unchanged from Friday’s cash session close. Then each repeated its relative performance intraday — the Dow’s dip stopped short of touching Friday’s low, while NQs probed decisively lower. All of which is a warning sign, not only when ES also underperforms, but more so when the relative performance is repeated both above and below.

ES probing a fresh high Tuesday would offer an opportunity to compare the Dow and NQs for signs that the relative performance is persisting. Its rejection could accelerate down into Wednesday. A new trend high close could be bullish, at least for probing another fresh high intraday Wednesday.

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