Market Wrap

Wednesday night’s drop extended to fresh lows just in time to shut the door on a path higher for the open, the Isolation setup. Another path higher was formed by the open blipping down further only momentarily, but its reversal attempt failed. That door was shut, too.

One more path higher has opened by fulfilling the next lower objectives at the three-week old 2652.00 low. A late collapse probed them down to 2642.00, then bounced to 2652.00 before the close. Probing it down to 2627.00-2628.00 and recovering — overnight to form an Isolation setup, or intraday to get squeezed into the weekend — would be the basis. Either setup is entirely possible and yet not often formed.

Closing under 2652.00 again Friday would confirm the next lower objective in-play, a retest of the crash’s lows at 2509-2511.00. Support along the way would likely be only temporary. Being a Friday, the morning’s bias tends to persist through the noon hour. So, almost literally, make or break.

• 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 2719.00 bias-down signal had held its test as support, with the help of invoking the grace period. No-bias triggered late, but compensated for the delay and surged to 2734.00 as the morning bias environment lapsed. Probing above its 2725.25 bias-up signal was no-bias trending and required being retraced.

The narrow noon hour’s range resolved down into the afternoon bias environment. Coming to within 3 ticks of 2725.25 qualified for neutralizing its attraction. Just in time for price to begin firming through a 2730.75 buy signal ahead of FOMC.

A knee-jerk reaction up to 2744.00 was reversed down almost as quickly to 2724.25. That’s 12 points up and 20 points down within 5 minutes or less. As expected, the recent ranging was only storing energy for an extremely volatile reaction.

There’s more? A lot more.

Also as expected, the new Fed chair’s first Q&A relived the volatility of his predecessor’s early days. A 30-point drop was underway into his appearance, and ended within 1 tick of the morning’s 2712.25 bias-down target. Its natural support and oversold RSIs produced a 21-point bounce, and still had time for a 19-point drop to 2714.25 into the close.

Oversold RSIs at the 2712.75 low still require a retest. Tuesday morning’s “unfinished business below” at 2710.25 is outstanding, too. Isolating their tests to the overnight could launch a multi-session recovery of the pullback from last week’s highs. Failing to hold their tests would suggest this is not a pullback.

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

It was a wide range, but a range nonetheless. Tuesday developed almost entirely above Monday’s 2716.25 cash session close, resisted by the 2726-2727 target created by Monday’s close above 2711.50. The morning’s bias left “unfinished business below,” an offsetting test of its 2710.25 bias-down signal. No matter how skeptical we were that it would be tested, and no matter how true that has been, it is an attraction that will need to be tested eventually.

So, was Tuesday’s go-nowhere strength only “ineffectual optimism” ahead of Wednesday’s FOMC events? Possibly, but not enough of it to be very bearish from a contrarian perspective. Overnight and/or morning fluctuations may try to trend beyond either end of Tuesday’s range but probably won’t. In contrast, volatility after the policy statement and during Fed Chair Powell’s first quarterly Q&A could be off the charts — (almost) literally.

PROGRAMMING NOTE: I’LL BE AWAY FROM THE SCREENS BETWEEN 11:15-1:45 ET WEDNESDAY.

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

Only a detour, still a detour, or more than a detour? Those are the most important questions to ask of Monday’s collapse. The answer to at least one of those is “yes.”

Already having tested and retested 2745.00, the next lower objective was 2735.00. It defined Sunday night’s low, but it didn’t hold on a retest. The next lower objective at 2726.00-2727.00 was tested too late to attract counter-trend sponsorship to defend it. So, its next lower objective at 2711.50 and 2706.00 had to be met.

The last objective was actually a test of 2701.50, which was limited to non-relevant timing windows that prevented its break. The tests reached 2697.00-2700.00 before finally ending the downside momentum. And having recovered 2706.00 and 2711.50 through the close, 2726.00-2727.00 was put into play. Post-close action extended up to 2723.50.

Recovering 2735.00 would have signaled the decline was only a detour. Bouncing already to leave a higher objective in-play allows this to still be only a detour, but recovering 2726.00-2727.00 Tuesday must also recover 2735.00. Whether or not first fulfilling 2726.00-2727.00, there’s little excuse for much backing-and-filling before actually rallying — and much more delay to that would suggest something more substantial than a pullback is underway.

• 2700Details and other markets coverage are discussed in the post-market Wrap recording here.
• Monitor overnight Globex trading in the chaRTroom here.

Friday’s expiration began the day by extending Thursday’s late recovery from 2745.75 to 2755.00.
Another 10 points higher into the morning bias environment exit probed the morning’s bias-up target yo to 2766.00, and proved to be the session high. Trending back down probed 1 point under 2755.00 through the afternoon bias environment exit, and proved to be the session low. The balance of the session retraced the high-to-low by 61.8% up to 2762.00.

That was almost a close back above 2758.00, except the final 2 minutes plunged 9 points to 2753.00. Its reaction only touched 2758.00. Not that expiration’s close isn’t the least relevant for predictive value. Much more relevant is that Friday was an Inside Day, and that price action has ranged choppily sideways since Wednesday afternoon broke back under 2770.00 and 2758.00. An accumulative pattern may be forming to launch another upleg.

None of which matters without a trigger. Or, with too much time elapsing without pulling a trigger. Still in the range through Monday morning would undermine the accumulative action. And after avoiding a WedEX signal, Friday’s range bound expiration doesn’t make Monday morning any likelier to trend.

• Details and other markets coverage are discussed in the post-market Wrap recording here.
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