Market Wrap

Wednesday’s mid-day ranging was spent chipping away at resistance, somewhat similarly to Tuesday. It wasn’t the session highs, like Tuesday’s 2936.00 upper-end. It was just under the 2945.00 high at 2942.00. But both patterns were chipping away at their resistance, and poised to credibly break higher.

The similarities are glaring when when each bias environment lapsing at 2:30 triggers a collapse on both days — 12 points on Tuesday down to 2924.00, and 16 points on Wednesday to 2925.50.

Both recovered to close back at or above 2928.00-2930.00, preventing sellers from gaining traction. Closing above 2936.00 would have kept alive the upside momentum. So, like Tuesday’s drop, trending up Thursday morning will require gapping up above the prior high. That’s more difficult now than it was Wednesday, which gapped up above 2936.00.

Extending the pullback has room down to the 2919.00 area, while still being within the bottoming pattern. But any lower would start to threaten 2915.50, and under it is a much deeper drop, and consolidation at a much lower level.

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

Tuesday’s unchanged open at the 2928.00-2929.50 range was a helpful early indication that sellers had not gained traction. And sellers had had an excellent opportunity to gain traction, having probed 5 points under Monday’s 2922.50 low. But the drop  down to 2917.50 was isolated to the overnight, and a post-open dip to 2924.00 was recovered to fresh highs at 2936.00 at noon.

Then that stopped. Then things changed.

Choppy sideways action through the afternoon tested 2931.00 through the noon hour and recovered 2936.00 at the bias environment high. But the bias environment exit started trending down, and touched the open’s 2924.00 low.

So, just one big sideways range right?

Actually, sellers gained traction by entering the final hour under the bias environment low and then trending down deeper through the 3:10-3:20 proxy window. Their reward is at some point to probe under 2924.00 — either into the close, overnight or Wednesday morning, or some combination — regardless of its durability, degree or resolution.

Which might seem to contradict the position of strength created by mid-day hovering under 2936.00, and managing to close back above 2928.00. And it might ultimately contradict it, by dipping back down to and through Friday afternoon’s 2915.50 lows, where the pattern becomes vulnerable to collapse. Meanwhile, my assumption is that a shallower dip will itself be isolated, and then be retraced to resume the recovery.

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

Monday didn’t trend down entirely. Only for 5 hours after the open into the final hour, from 2942.00 down to 2922.50. Which, by the way, was entirely positive territory — 2-3 ticks above Friday’s futures close and 3-1/2 points above its cash session close. “Lower prior highs” down to 2928.00 held as support through the close, albeit as barely as last week’s closes above 2919.00.

Of course, the rally is undermined somewhat for needing to retrace Friday’s range without having found new buyers any higher. The 2929.25-2930.00 close did hold above Friday’s high, but not Thursday or Wednesday’s higher highs, which were probed already through Monday’s open. And oversold RSIs at Monday’s low will want to be retested.

The prior Friday’s high session was retraced by 61.8%, which can serve by proxy to retest the high, although it’s not optimal. And the high’s gap up remains unfilled. Either Monday’s drop is in the process of completing a backing-and-filling pullback, or else gapping open Tuesday under Friday afternoon’s 2915.50 low will be vulnerable to collapse.

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

Friday morning’s rally missed the opportunity to complete a retest of Wednesday’s 2907.50 low. The overnight attack on it to within 2 ticks also missed the opportunity. None of which is predictive, not without the actual attempt to break lower. Its failure creates a consequence… and that’s what the methodology is all about.

So, this morning’s consequence was an offsetting test of the 2924.50 bias-up signal, for having held a test of the 2916.25 bias-down signal. Done. Its morning test marked the session high. And being a Friday, the balance of the session only ranged choppily sideways as was most likely.

Meanwhile, the close (barely) recovered 2919.00. That’s a different pattern, but the consequence should be to retest the prior Friday’s highs. And there would have been consequences to not recovering it, and/or to closing under 2914.00.

Details and other markets coverage are discussed in the post-market Wrap recording here.
JOIN US AT 9:30 ET FOR THE SATURDAY REVIEW.

Wednesday afternoon’s plunge to 2907.50 cannot form a durable bottom without being retested. We knew this at Thursday’s open, despite it gapping to and through what had been “lower prior highs” at 2914.00, and extending above 2919.00. This downside requirement continued despite extending higher through the bias environment, into and out of the noon hour. up to 2932.00.

And the downside requirement under 2907.50 remains likely, despite already dropping 15 points from Thursday’s high to attack 2917.00. That’s a lot of selling pressure to expend in a short time frame, and to still have downside. But Thursday afternoon’s sellers gained traction — exiting the bias environment under the noon hour’s low and entering the final hour even lower. Friday morning is likely to trend lower, if not isolated to the overnight.

Meanwhile, Thursday’s close did recover 2914.00 and (barely) 2919.00. Probing lower on Friday would originate from a position of strength. Whether done overnight or during the morning, a recovery is likely. Probing lower without recovering would instead point sharply lower.

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