Market Wrap

Holidays impact liquidity, which impacts volatility, because lower volume inhibits participation, and that’s just among the participants that bother showing up, while so many other participants are on holiday, which is impacting liquidity. You’ve heard of the Circle of Life? That’s the circle of death.

Or, it can be.

If Monday afternoon’s 24-point rally is any indication, then trending attempts remain possible. Trending within the range, more so than trending beyond it. Like Monday’s recovery from its overnight probe of 22 points under Friday afternoon’s 2720.50 low. That was back TO the range’s lower-end, but not THROUGH it — before reversing 24 points back INTO it up to 2728.50.

And the afternoon rally came from a position of weakness at 2704.00, already retracing the morning’s rally, and now likely to retrace Monday afternoon’s rally. Likely to retrace it Tuesday so long as the open isn’t extending Monday afternoon’s rally, and preferably already trending down.

Extending any higher Tuesday morning wouldn’t be any likelier to retrace last week’s highs. Actually, Tuesday morning’s likely pattern only ranges sideways, still being vulnerable to trending into the 1:15 PM ET early close. [Programming Note: Tuesday’s Market Wrap will be held early.]

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

Friday was all about Thursday, apparently. Maybe not all about it, but Thursday’s signals were influential.

Thursday’s buyers had gained traction that earned the reward of probing higher Friday morning. Gapping up Friday to 2730.00 extended higher through the bias environment to 2745.50. The balance of the session was spent retracing the post-open gains. Until that was completed during the position-squaring window. Which then extended back under Thursday’s 2726.25 high. And still had time to touch 2720.75.

Thursday’s close had dipped back under 2718.00 to prevent signaling the rally had reversed up. This doesn’t prevent another attempt, but dooms that attempt to failure. Retracing back to the open’s gap up would have qualified as doom, but also required gapping down Monday. Retracing back within Thursday’s range increases the vulnerability to gapping down.

Friday’s intraday setups were also influential. Mostly for what they did that wasn’t required. Like break under the afternoon bias environment’s isolated low, after its shorts were trapped. That’s new sponsorship. Or, like collapsing back under the opening gap. That’s rejection.

Thursday’s bounce was not itself reversed, or even rejected. But Monday’s resolution to Friday afternoon’s drop should be predictive of the market’s next move.

Details and other markets coverage are discussed in the post-market Wrap recording here.
REMINDER: NO SATURDAY REVIEW THIS WEEKEND.

How much optimism can still be “ineffectual optimism”? Wednesday night’s example was a sideways range in positive territory that never trended up, and finally collapsed before Thursday’s open. Thursday morning’s example was the collapse’s recovery, but not of the overnight range.

Then came Thursday afternoon.

A buy signal triggered above 2710.00 targeting the bias environment’s 2715.00 bias-up signal. Which extended quite a bit higher through the bias environment lapse, up to 2726.25.

11 points above 2715.00 doesn’t seem ineffectual. But the close dipped back under 2718.00. And the bounce essentially completed a 61.8% retracement back to Wednesday morning’s high.

Meanwhile, buyers gained traction for their efforts, exiting the bias environment above the noon hour’s high and entering the final hour higher. Sellers did the same thing Wednesday, and were rewarded with the morning’s temporary collapse. Closing under 2718.00 could be a position of weakness that dooms to failure an early attempt to extend Thursday’s rally Friday. Unless Friday’s open collapses back under 2710.00 to negate Thursday afternoon’s traction.

The late pullback left outstanding a Close-quarters Double Top which is usually retested. That’s not required, but it keeps alive the upside resolution first. And being a Friday, an attempt to extend Thursday afternoon’s would be vulnerable to extending higher into the afternoon.

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

Volatility remains alive and well. The market, maybe not so much. Don’t blame optimists. They’re doing their best. Patient sellers are letting them expend all of their energy, and then exploiting them.

One example: Wednesday’s overnight probe under Tuesday’s 2717.50 low was recovered to form an Isolation setup. Perhaps that recovery was exacerbated by a friendly trade war headline, but its reaction had almost fulfilled its 2735.25 objective at the open. So, patient sellers let impatient buyers extend to the next higher resistance, quickly, before strong-handed reinforcements could be attracted. This resulted in a stretched rubber band that easily retraced the friendly headline back down to 2715.50.

Another example: The headline’s retracement would rarely neutralize the initial reaction’s failure. That didn’t inhibit bottom fishers from slowing the decline, while maintaining the downtrend, and forming a Falling Wedge. An attempt to break higher up to 2720.00 missed that buying pressure just when it was needed most, and the downtrend resumed more aggressively to touch 2701.00.

The bigger picture suggests that Tuesday night’s decline has resumed, and that was already an effort to resume Monday morning’s decline. Retesting the 4-week old 2679.00 low should find only obligatory support, already having utilized “lower prior highs” to launch what may soon be a failed upleg. Meanwhile, sellers gained traction for their efforts, so only gapping up above 2722.50 would be credible for reversing the trend back up.

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

Having failed to gain traction during Monday’s final hour rally, extending higher without delay Tuesday morning required gapping up. But opening at Monday afternoon’s 2725.00 high did not suffice. The rally didn’t reverse down, but Tuesday morning ranged very choppily between 2718.00-2728.00. The morning’s 2728.25 bias-up target held.

And then the morning ended. Trending up into the afternoon bias environment came within 1 tick of its 2735.50 bias-up target. Like the morning, it also held. No new buying pressure was created.

Drifting back down through the proxy window to 2727.25 suddenly reacted up 5-1/2 points on a favorable China trade war comment. Its retracement was reversed through the close to fulfill its 2723.75 objective. The session went out overlapping yesterday afternoon’s 2725.00 high, again gaining no traction, and leaving no unfinished business outstanding.

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