Market Wrap

Wednesday’s biggest setup formed before the open, and played out mostly before the open, too. It was the late break from a sideways Globex range. Probing 3 points under it to 2906.00 90 minutes before the open was recovered entirely and then extended up to 2917.00 through the first 3 minutes. Its reaction down to 2910.00 was recovered to attack 2919.00. Almost as much, and no more durable. The balance of the session consolidated back to 2912.50.

Trending would have been unusual for a low volume session. A little deeper retracement to 2903.00 wouldn’t have been unusual, but perhaps the opening surge injected too much optimism. That early optimism did hold a test of the morning’s 2915.25 bias-up signal to put into play an offsetting test of its 2908.00 bias-down signal, which became “unfinished business.”

If not for the holiday’s impact on participation and volume, the rally would have resumed already. It’s free to resume Thursday, or overnight, with or without neutralizing 2908.00, which can be done overnight, too. Deeper down to 2903.00 is still likely to hold, and momentum doesn’t even threaten to reverse down from above 2900.00.

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

As of 3:35pm ET

The Isolation setup’s minimum objective, or reward, is to retrace the last leg’s origin. Which would be a new high for the setup that formed through Tuesday’s open. Tuesday’s open at or above 2897.00, which already exited the afternoon bias environment probing 2 ticks above last week’s 2917.25 “new Globex trend extreme.”

So, that’s done.

Meanwhile, another setup formed by exiting the open above Monday afternoon’s last relative high at 2903.00. Which made up by proxy for Monday’s close not recovering 2897.00. The setup has no particular objective or reward, only the indication of the pullback having ended. So, Tuesday’s retest of Friday’s highs should extend, and not form a top.

Not necessarily in a straight line. Thinner volume during Wednesday’s Yom Kippur holiday will inhibit extending the trend, while a pullback could easily dip to 2903.00 alone as noise. Thinning volume can also make it difficult to stop price that extends higher anyway.

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

Blame it on the trade war. Friday’s fresh high close at 2911.25, sufficient backing-and-filling behind it, was free to extend higher without delay. Buyers had not gained traction Friday afternoon, so immediately resuming the rally Monday required gapping up. Not gapping up would not resume the rally earlier than late-afternoon.

Monday did not gap up. In fairness to Monday morning’s buyers, Sunday night had gapped down, and stayed down testing 2904.00, in reaction to trade war headlines. Bias-up was probably not an option, but the morning’s 2907.00 bias-down triggered anyway when no-bias would have sufficed.

Despite already probing the morning’s 2900.25 bias-down target by 1 point, the afternoon’s 2901.50 bias-down triggered anyway. Its 2896.50 bias-down target was probed by 4 points.

Probing under 2897.00 without closing back above it does threaten to reverse the trend down. Post-close action immediately surged back up through 2897.00. Too little, too late, to establish a position of strength, but it may still help to absorb selling pressure from the post-close trade war headlines we were told are coming. Recovering Monday’s last relative high at 2903.00 at Tuesday’s open would now serve by proxy.

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

Finally breaking higher into and out of Europe’s opens probed fresh recovery highs overnight up to 2917.25. That was back into the Aug 29 high session’s range, almost filling the gap back to its close, and retracing 38.2% of the range at its intraday highs. The action was just complex enough to be considered a “new Globex trend extreme” requiring intraday retest.

But not necessarily the same day. And not Friday. The open was greeted back at the morning’s 2912.25 bias-up signal, which probed back under overnight lows and into Thursday’s range down to 2907.00. Recovering to 2912.25 stagnated, before collapsing in reaction to a trade war headline. Extending down to 2902.00 coming out of the noon hour finally fulfilled the morning’s no-bias objective.

The afternoon trended back up to retrace the 2912.75 origin of the trade war headline’s knee-jerk reaction. That was also a retest of the morning’s bias-up signal, and a 61.8% retracement of the congestion which had developed there before the morning’s collapse. Buyers once again failed to gain traction.

Details and other markets coverage are discussed in the post-market Wrap recording here.
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Thursday’s post-open rally was no more impressive than walking from here to there. Unless here to there is along a tightrope. In which case, Thursday’s post-open rally was impressive for not falling.

The 2905.00 open was already 5 points above Wednesday’s high and 15 points above the overnight low. Post-open action initially consolidated, but then surged to 2912.00. Reacting down to 2902.00 was recovered to within 1 tick of the open’s high — stopping pessimistically short, which tends to be bullish from a contrarian perspective. And by the way, dipping only to  2902.00 avoided touching Wednesday’s high, which creates a position of strength, or anchor, that allows a deeper dip to “lower prior highs” at 2897.00 if needed.

If needed. Which it shouldn’t be. The balance of Thursday afternoon ranged narrowly sideways, and already included an extra dip, reducing the potential for another one overnight. Dipping overnight anyway has room for noise down to 2903.00. Meanwhile, Thursday’s rally is likely to resume Friday morning. And since the rally didn’t gain traction Thursday afternoon, resuming it without delay Friday all but requires gapping up.

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