Market Wrap

Did China steal another rally opportunity? Wednesday’s open had held a test of the 2888.00 earlier overnight low, whose break would have been bearish for rejecting the overnight probe above Tuesday’s 2893.00 high. Not fully forming the setup tends to be as bullish as it would have been bearish, but bias-down triggered in the morning, and quickly met its target.

Surging back up to the 2895.25 overnight high was triggered by a headline, and it was soon retraced to its 2883.00 origin. Wednesday didn’t feel very bullish — certainly not “as bullish as the open’s setup would have been bearish.” Such is the nature of artificial catalysts like headlines. They don’t complement organic sponsorship, but supplant it.

We can only assume that organic sponsorship had intended to resolve bullishly. Which can still develop. And having failed to gain traction Wednesday afternoon, resuming the rally without delay all but requires gapping up Thursday. Not already probing higher overnight would likely already be probing lower, and more vulnerable to trending down.

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After initially bouncing overnight up to 2884.50 resistance, China tariff headlines triggered a slide to 2867.25 through Tuesday’s open. The artificial catalyst was quickly reversed, recovering tests of both bias-down parameters. Offsetting tests of both bias-up parameters were soon fulfilled — the 2884.50 bias-up signal was met coming out of the bias window, and a surge into the noon hour met the 2890.75 bias-up target.

The morning’s bias-up target and the afternoon’s 2891.25 bias-up signal, being resistance, held the upper-end of a consolidation down to 2887.50 through the close. No unfinished business was left outstanding.

No traction was gained, so immediately resuming Tuesday’s rally Wednesday would require gapping up. That’s also required for immediately extending Tuesday’s outside day. Next higher upside objectives begin at 2895.50. Whether overnight or post-open, pullbacks have room to “lower prior highs” at 2882.00-2883.00. Back under 2879.75 through any relevant window could extend the 2-week old pullback to fresh lows.

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

What a difference a day makes. In this case, that day is Rosh Hashanah. Like almost every year, the slower volume inhibits both trending and volatility. Monday was no exception.

Signals that are triggered on low volume are less reliable, especially as time extends. Rejecting the morning’s test of both bias-up parameters put into play offsetting tests of both bias-down parameters. Both 2871.00 and 2864.75 become “unfinished business” below. Price action in their proximity will be likely to test them, but they’re attractions won’t make an interim buy signal any less credible.

Meanwhile, slower volume doesn’t prevent neutralizing unfinished business above. Rejecting both of Friday morning’s bias-down parameters had put into play offsetting tests of both bias-up parameters. That included 2886.75, which was tested overnight and Monday morning to define the range’s upper-end.

Other attractions above that remain outstanding include 2892.25 and 2895.50. They’re recovery alone wouldn’t yet signal reversing up from the pullback off of last week’s high. And the pullback still has potential for extending down to 2857.00.

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

The short-squeeze for Friday afternoon was never actually confirmed by recovering 2884.50 into the noon hour. The bias window’s exit had touched 2884.50, only for a reaction down to 2877.00 to try resuming the rally. The reaction down failed, instead inflecting down under 2877.00 in a knee-jerk reaction down to tariff headlines that tested 2868.00.

Unfinished business above at 2886.75, 2892.25 and 2895.50 would have to wait. Buyers gained no traction for their efforts Friday afternoon, which really should have been evident during the same noon hour window that had reacted down. Gapping up Monday above Friday’s 2884.50 high would serve by proxy, just like gapping up Friday above Thursday’s 2893.00 would have served by proxy.

Meanwhile, a recovery needs to find buyers at lower levels. There is potential down to 2857.00, if not a likelihood for having closed under Wednesday’s 2877.50 low. A corrective bounce up to 2879.75-2881.50 can’t be dismissed, and must hold to maintain the near-term downside potential.

Details and other markets coverage are discussed in the post-market Wrap recording here.
NO SATURDAY REVIEW DUE TO TRAVEL, ENJOY THE WEEKEND!

Retesting Wednesday’s oversold RSIs at its 2877.25 low had room for noise down to 2875.00. Probing it down to 2868.00 may have been too much to absorb before extending down to 2857.00. Or, probing it down to 2868.00 may have been absorbed. The difference is in whether its reaction back up was able to close above a relevant resistance.

It didn’t.

2880.25 was still being overlapped into the close, after 2884.50 had contained the afternoon rally. So, rather than recover these levels to essentially isolate sellers, buyers expended as much energy as possible while still not gaining traction for their effort.

Of course, there’s another difference, made possible by the heightened sentiment ahead of Friday’s Employment Situation report. If recovering relevant resistance is simply delayed, then Friday’s open can serve by proxy. But the standard is higher, like gapping up above Thursday morning’s 2893.00 high. And maintaining it. And extending it.

Meanwhile, Wednesday afternoon’s 2895.50 bias objective remains “unfinished business” above that could attract price higher, and facilitate a test of 2893.00. No unfinished business lies below, so trending down post-open anyway would be that much more bearish.

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