Market Wrap

Friday afternoon’s 50-point plunge exceeded the overnight 40-plunge. That had been triggered by the evening announcement of $100m more in tariffs against China. The afternoon plunge was triggered by the impending weekend illiquidity. The pattern’s resolution down continues to be likeliest.

There is no “unfinished business above,” and resuming the decline could target another 30 points lower and attack prior lows. And there’s no bullish reason to attack prior lows. With sellers having gained traction Friday afternoon, gapping up more than 30 points Monday may be the only way to avoid extending the decline.

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We didn’t know it at the time, but Thursday’s session was largely over before midnight Wednesday. 2660.00 resistance was being tested then, and it has been the center of a 20-point range since then. The afternoon’s 2550.00 bias-down target defined its lower-end, and the morning’s 2672.00 high held a retest during the final hour.

If there’s any sentiment to consider from a contrarian perspective, it would be the afternoon’s two dips. Both reversed back up almost precisely from their targets, where selling pressure was satisfied. But the “V” bottoms that formed do not reflect accumulation. Rather, that’s impatient buying, which is potentially bearish from a contrarian perspective.

Regardless of the knee-jerk reaction to Friday’s Employment Situation report, trending through the opening 15 minutes of volatility would be likely to extend in that direction. Friday Factors keep the door open to resolving in either direction.Otherwise, not decisively closing above 2660.00 Thursday undermines the next higher objective at 2722.00. And closing back under 2644.00 would be likely to trend down out of the weekend, too.

• Details and other markets coverage are discussed in the post-market Wrap recording here.
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Any opportunity to reinstate the 1987-style crash template had all but disappeared at Wednesday’s open. The overnight Symmetrical Triangle’s false break down was reversing up more substantially, instead of extending the overnight plunge.

That didn’t foreclose upon potential to reverse down less aggressively into the afternoon, but the rally extended instead. Ultimately, 90 points off the 2559.50 overnight low and testing 2650.00 was probing above Monday’s 2638.00 high.

The recovery of dropping from last Thursday’s high barely exceeded its 2644.00 bounce limit’s room for noise at the close. But the limit was holding before coming within 3 minutes of the cash session close. The similar bounce limit has yet to be met at 2660.00, where retracing the entire last downleg from last Tuesday’s high could still be only temporary.

So, extending any higher would seriously undermine the near-term downside momentum. And it would suggest a longer delay in at least retesting the lows down to 2509.00-2511.00. Almost any immediate weakness Thursday would be credible for extending down into and out of the weekend.

In case you missed it earlier, click here for a quick video description of how the overnight Symmetrical Triangle offered guidance and confidence to being long.

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

Tuesday avoided a repeat of Monday’s plunge. That’s not necessarily bullish, and probably isn’t. But it leaves only a very narrow window for tracking the 1987-style crash template — by trending down sharply Wednesday either without delay or by the morning bias environment exit. Regardless, Tuesday’s bounce is still likely only a temporary correction, likely to resolve down anyway.

Overbought RSIs at Tuesday’s 2618.75 high require a retest. That should include 2620.00 and potentially 2628.00 or 2631.00, while still being only a temporary correction of Monday’s plunge. Meanwhile, “unfinished business below” was left outstanding at 2566.50, which should be tested on the way to resuming Monday’s plunge.

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

Compared to how April came in, March went out like a lamb. The Dow was off 840 points at its low. There was no hint of the day’s intent until the opening 15 minutes of volatility had lapsed. And then there was no denying it. Only one bearish scenario was likely for the day, compared to two bullish scenarios. And the bearish scenario was only very bearish. But its objective to retrace recent lows didn’t require being fulfilled intraday, yet it was.

Last week’s 2796.00-2698.00 lows had only temporarily avoided retesting the prior Friday’s 2585.00 low. And the 2585.00 low’s retest of Feb 5’s pivotal low had all but required new lows down to 2509.00-2511.00. All were put into play by Monday’s dominoes, which remained toppled at the close. In fact, a late bounce only touched 2585.00 when recovering it could have undermined near-term momentum.

Now as important as any price is price behavior. A second consecutive intraday plunge on Tuesday would realign the 1987-style crash pattern. Not optimally — that timing has passed — but the template would allow a break under 2509.00-2511.00.

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