Market Wrap

Headline surprises can derail a market from its path, but not from its outcome. We’ll never know whether Thursday afternoon’s no-bias environment intended to resolve up or extend sideways, had it not encountered the Trump-probe news.

The headline triggered a break under the no-bias environment’s 2755.00 bias-down signal. The drop tested 2746.00, and eventually fulfilled its requirement to retrace 2755.00. The low touched last Thursday’s “lower prior highs,” albeit several ticks short of actually filling its gap which is preferable. It was late enough to inhibit both reinforcements and counter-trend sponsorship.

Would the bias environment have resolved up to neutralize other unfinished business above at the morning’s 2767.25 overbought RSIs? If that buying pressure was expended to retrace the headline’s knee-jerk reaction, then a lower low down to the 2735.00 area is the next lower objective.

Last-minute moves into expiration can exacerbate moves. But regardless of the potential further downside, two consecutive closes under 2758.00 are still overlapping 2758.00, still allowing a new accumulative pattern to form.

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Bouncing overnight had been consolidating for hours around the morning’s 2781.50 bias-up signal. The open didn’t trigger it, requiring the offsetting test of its 2766.00 bias-down signal. Its break into the noon hour soon tested 2750.00, which held another two tests to define the afternoon’s low. An interim bounce to 2767.00 failed to exploit the opportunity to recover 2758.00, let alone 2770.00, which would have this week’s pullback has ended.

2813.00 and 2830.00-2833.00 are not in-play. They can be reinstated by another accumulative pattern. Or, Thursday’s open can immediately reject the close(s) under 2758.00 (if not also 2770.00).

Wednesday’s low probed into the gap between last Thursday’s 2745.00 close and Friday’s 2757.00-2759.00 gap up. Gaps look deceptively like air pockets because of no prior trading there. Actually, gaps have more friction because no price action has yet chipped away at it. It’s therefore interesting that probing into last week’s gap didn’t reverse up or collapse through it. So, it will also be surprising if Thursday’s open doesn’t resolve immediately one way or the other.

No WedEX triggered. But Thursday’s open could complete a WedEX setup by proxy. Otherwise, there won’t be any likely bias into and out of the weekend. Which wouldn’t preclude there being bias, only a reliably predictive likelihood.

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

2818.00 and higher was put into play Friday by closing above 2770.00, which had been put into play by closing above 2758.00. Actually, 2758.00 was first probed the same day, but it’s still the room for noise back under 2770.00. Closing under 2758.00 would invalidate any consequences for having closed above 2770.00.

2770.00 ultimately held its test through Tuesday’s close, or at least was being probed as resistance. It had been probed below down to 2762.50. Anyway, still testing 2770.00 at the close means the very late bounce didn’t recover a relevant level, and trended down into the close. So, gapping up above the afternoon bias environment’s 2788.50 high could form a “session-long rally setup”.

There’s plenty of upside to reward buyers. Tuesday morning’s 2794.75 bias-up signal was broken during the bias-up environment, requiring its retracement. And the Double Top with Monday’s high is a pattern that is often recovered by resuming the prevailing trend. Not to mention 2818.00.

A recovery is still possible from testing 2758.00. But there’s no bullish reason for any further backing-and-filling. So, delaying a recovery much past Wednesday’s open would suggest a bearish expiration sentiment.

• Details and other markets coverage are discussed in the post-market Wrap recording here.
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Before even triggering Friday morning’s 2793.50 bias-up signal, its 2801.75 bias-up target had been fulfilled. Reversing back down through the signal came too late to reject its recovery, let alone to reverse momentum down. That didn’t prevent probing lower anyway, but only by weak-handed sponsorship.

The balance of the session was resisted by 2793.50, even a late surge to 2797.00 that had begun 13 points lower. The position-squaring window’s exit fell back into the range at 2787.50. Being a 61.8% retracement of the afternoon’s range, it is natural support.

A deeper pullback Tuesday can’t be discounted. There’s room down to 2770.00 before even suggesting that sellers are retaking control. Otherwise, the next higher 2813.00 objective remains in-play. Meanwhile, note that NQ (NDX) closed higher, while ES (S&Ps) closed flat, and YM (Dow) closed lower — we discussed this complex relationship during the weekend’s Saturday Review, and Monday’s extension of that relationship is bullish.

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

Friday trended up throughout, but it was not a session-long rally. Even then, a session-long rally setup would include one window no probing a prior timing window’s high, but Friday’s intraday rally was relentless.

It was also substantial. The pre-open Employment Situation report’s reaction tested the next higher objective at 2758.00, and the morning bias environment exceeded its next higher objective at 2770.00. Having avoided the distributive template all morning, the afternoon extended up to 2792.00.

Having avoided the distributive template’s reaction down all day, its next appearance should control the entire session, or two. Perhaps it will also be influenced by the Friday Factor — keeping the morning’s bias persistent through the noon hour, and exploiting the afternoon bias environment holding off sellers.

Monday’s open could be the beginning of that multi-session distribution template, already trending down through the morning. Otherwise, the next higher objectives in-play are 2818.00 and 2830.00-2833.00.

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