Market Wrap

Tuesday’s gap up seems to further confirm the rally is in a stage of relentlessness. Not extending higher intraday doesn’t change that, but it does increase near-term vulnerability to a pullback. That said, trending up or gapping up remain likelier.

Trending up probably would have been attracted back down to Monday afternoon’s Symmetrical Triangle, but Tuesday’s gap up above 2854.25-2856.00 broke that attraction. Reacting back down into the Triangle is still possible, but now it would be from a position of strength, and likelier to recover.

Meanwhile, ranging sideways through Tuesday’s noon hour and afternoon formed a lot of overlapping legs. Separately from the gap up, the overlapping legs creates mass that also makes trending away likely to return. So, another position of strength to help recover from dipping back down into Monday afternoon’s range.

Not that Wednesday’s open won’t immediately extend on its way to 2873.00 and higher. But we’ll know the context of a dip if one appears, whether just testing Monday afternoon’s range down to 2851.00-2852.00, or deeper down to 2841.00-2843.00.

More so, thanks to maintaining Tuesday’s gap through the day, gapping down would form an Island. And since Islands were made to be retested, that would just be another position of strength to absorb another pullback.

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

SPECIAL NOTE: I’ve produced two new Bias Parameter videos, an introduction and an example. They’re linked perpetually on the daily Bias blog posts. A handy library of actual examples will be made available later this week, along with much more supporting reference items.

Monday’s rally extended through the noon hour’s exit, and almost into the afternoon bias environment. Bias-up still triggered, putting into play 2854.25. But the balance of the session only ranged sideways. Choppily sideways, back down to 2847.00 and narrowing into 2850.00.

The 2854.25 bias-up target becomes “unfinished business above.” Which helps to keep alive the rally, since Monday meanwhile fulfilled the outstanding requirement for at least one more eventual higher close. Fulfilling it isn’t bearish, but could have become bearish without creating the new higher attraction to 2854.25.

I suspect the rally is in a relentless stage. Meaning that it will maintain its uptrending series of higher highs and higher lows, next targeting 2873.00 up to 2883.00. Monday’s rally overcame both the open’s Globex-flip setup, and morning bias-up’s threatened rejection. One day’s rally probably isn’t the entire reward.

None of which precludes another corrective dip. Monday afternoon’s range formed a Symmetrical Triangle. The pattern often breaks falsely in one direction before reversing more substantially in the opposite direction. A break lower could attack or probe 2843.00 before recovering.

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

Thursday’s relentless optimism clearly discounted Friday’s Employment Situation report. The news was greeted at Thursday’s 2828.50-2831.00 highs, where its reaction fluctuated into and out of the open. Of course, the report wasn’t the only influence, so it’s more coincidence than efficiency that the news was already perfectly discounted. But it’s still

Breaking out of the 2828.50-2831.00 range attacked the 2836.00 overnight high before retracing. The open’s range held as support, and being Friday morning, sellers were done. Not finished, but done. The balance of the session trended higher to fulfill both the morning and afternoon’s 2837.50 and 2838.50 bias-up targets.

And higher. Exiting Friday afternoon’s bias environment beyond the session’s other timing windows tends to extend. The final hour’s entry surged up to 2840.25 where resistance was already identified. Its reaction down was brief, and too late to be the work of strong-handed sponsorship. The afternoon’s uptrending pivotal support held its initial test, and overbought RSIs attracted the close back up to the high.

Retracing the prior week’s 2838.25-2842.25 high close confirms the interim dip was only a temporary correction. Which also confirms the eventual third higher close requirement. Closing within the prior high close’s range doesn’t qualify. The likelihood for probing January’s highs remains intact, too.

Details and other markets coverage are discussed in the post-market Wrap recording here.
THE LINK TO THIS WEEKEND’S SATURDAY REVIEW WILL BE EMAILED BEFORE ITS 9:30 ET START.

Thursday’s rally through the afternoon bias environment greeted the noon hour within the bias environment’s range. And the 3:10-3:20 proxy window didn’t trend. So, exiting the bias environment above the noon hour’s range never confirmed it was gaining traction. Which leaves vulnerability either way in reaction to Friday’s pre-open Employment Situation report.

That was a lot of buying pressure to expend Friday, relentlessly, without gaining traction for its effort. If the buying pressure is optimism, then it is “ineffectual optimism.” Which isn’t a sell signal, but it essentially requires more optimism without delay to avoid being reversed. And if that’s just one degree of difficulty, now it’s two degrees, since post close action fulfill the 2831.00 upper end of the target area ,too.  More buying pressure expended, still no traction for the effort.

There’s still at least an eventual third higher close required, and a likelihood for probing January’s highs. That was signaled last week, and so was the potential for a temporary pullback. Relevant levels have been tested and held, and now proved influential. None of which requires extending higher immediately Friday, but all of which remains consistent with the bigger picture expectations.

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

Wednesday morning’s delayed surge up to 2826.00 offered a high-probability short. No-bias trending above 2823.25 was already likely to fail, especially with the afternoon’s FOMC event inhibiting sponsorship. Its reaction’s 2815.00 target was exceeded by 61.8% down to 2808.00.

So, question: Was that defensive posturing successful to help absorb an initially negative knee-jerk reaction to FOCM? Price had only firmed into the FOMC, so optimism wasn’t excessive. A delayed reaction dipped to 2805.50, ignoring potential for another point lower before bouncing to 2817.00. So, short answer: The morning’s discounting helped.

Longer answer: It probably didn’t help enough. The afternoon’s recovery was unimpressive — perhaps inhibited by a White House announcement re:China that never materialized. Unlike Tuesday, 2817.00 was only touched and not recovered, which keeps the pattern vulnerable to dipping deeper. In fact, there’s already a 9-point drop into and out of the close.

Whether 2804.50 or a deeper probe under 2801.50, isolating fresh lows to the overnight could seal a near-term bottom. Gapping up above 2820.00 would be credible for extending higher, too — difficult, but credible. Meanwhile, Thursday’s close determines whether Friday’s Employment Situation report is greeted from a position of strength, or weakness, which could be a landmark for near-term direction.

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