Market Wrap

The two influences competing with each other at Thursday’s open were still competing with each other at Thursday’s close. Probing under Wednesday’s intraday range was isolated to the overnight, even after trending down throughout Thursday afternoon. Also influential for a fourth consecutive session was the early rejection of early strength, as in trending down throughout Thursday afternoon.

Did I mention that Thursday afternoon trended down throughout? It held a test of 2701.50, which must hold as support to maintain that this is all a temporary pullback. Meanwhile, the Isolation setup would be well-served by Friday maintaining a gap up above Thursday afternoon’s 2720.00 bias environment high or noon’s 2731.00 high. Trending up into and out of weekend would be possible.

Meanwhile, there’s Thursday afternoon’s downtrend, which should be mentioned. If the market isn’t yet conditioned not to rally early, then another rally would be that much more credible. But, a rally that is maintained — like a gap up — without already reversing down as the open or bias timing window lapses. The next break under 2701.50 could be the next downleg getting underway.

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

Tuesday afternoon’s sellers had gained traction through the bias environment exit and the final hour’s entry. Gapping up enough Wednesday could have invalidated that traction. Not gapping up enough would reflect weak-handed sponsorship and doom to failure any bounce.

Apparently, no matter how long that might take. We know, because Wednesday morning’s rally held up into the FOMC Minutes, and even extended on a knee-jerk reaction to it. That only exacerbated the rubber band stretch, which snapped back down as the bias environment began lapsing.

The afternoon peak tested its 2646.50 bias-up target by 1 tick while RSIs diverged negatively. Its reaction down collapsed to eventually probe the afternoon’s 2619.00 bias-down target and filled gaps back down to Tuesday’s 2714.00-2715.25 closes before correcting.

The afternoon collapsed again to retest oversold RSIs at Tuesday’s 2705.75 low. The next lower objective at 2701.50 was probed by 8 points down to 2693.50. Unless rejected immediately Thursday, a new downleg is underway. Meanwhile, the third consecutive day of morning rally and afternoon drop has likely conditioned buyers not to buy.

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

Despite gapping down, Tuesday morning trended up to fulfill the bullish WedEX. An 11-point surge out of the open was followed by a 20-point upleg into noon, interrupted by a lengthy 14-point pullback. As if suddenly realizing WedEX’s influence ends at noon, the balance of the session trended down to fresh lows.

Fresh post-open lows, which also probed under the overnight lows. The bullish influence was indeed done.

So, now the question gets a question. The question is whether last week’s rally was only a temporary corrective bounce. And now the question it gets is whether the decline into Tuesday’s lows is resuming the previous decline.

Yes, according to oversold RSIs at Tuesday’s low, which require a retest. Also according to sellers having gained traction through the bias environment exit and the final hour’s entry. Both setups keep alive the downward momentum — the attraction below, and the traction earned before it. But last week’s rally hasn’t yet been retraced deeply enough to signal its trend has peaked, let alone been replaced by a downtrend.

Gapping up enough Wednesday could invalidate sellers’ traction and delay retesting the low’s oversold RSIs. Follow-through to gapping up enough could resume the rally. Meanwhile, there’s only one lower objective to be met while keeping in the context of correcting the bounce before it resumes. Any deeper would start to signal the correction had ended.

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

Thursday’s closing surge extended through the close and into the Globex open up to 2737.50. Fluctuating narrowly down to 2733.50 became the midpoint of widening swings into Friday’s open, up to 2746.75 down to 2722.25. And then out of the open up to 2754.75 down to 2726.00. Even Friday afternoon’s narrowing range still centered around 2737.50.

In fact, that’s where Friday afternoon’s bias environment was entered. Despite probing lower in the interim, that’s also where the session closed… sort of. That was the print 3 minutes before the cash session close, which matters most, but doesn’t account for a momentary 6 point dip under it at the close.

The point being that Friday afternoon’s bias environment didn’t trend down, and it absorbed dips. This behavior barely qualifies as remaining vulnerable to rallying sharply at the next regular open. Whether or not that next open is flat or gapping — up, or down — is unknown. But initial strength would get a benefit of the doubt for extending through the morning.

Meanwhile, the 2753.00-2757.00 objective was probed. Not entirely, but that’s not necessarily to consider it met, and not requiring retest. No higher objective is in-play without closing above 2757.00.

• Details and other markets coverage are discussed in the post-market Wrap recording here.
• NO Saturday Review this holiday weekend.
  

Thursday’s gap up above the morning’s 2713.50 bias-up target could have resolved a lot of ways. Exceeding it in time would have renewed the bias-up signal. Reversing down from it and under the bias-up signal would have targeted both bias-down parameters.

But something in between — like Thursday’s opening pattern — was likely to test the 2703.00 bias-up signal as support and either hold it or recover from probing under it. And having probed under it 2788.50, the pattern would likely reward its buyers with a fresh session high above 2717.50-2719.50.

That’s two sizeable moves being signaled before noon, and the session kept giving.

The fresh high promised by the second signal also triggered the afternoon’s 2712.50 bias-up targeting 2725.00. It was probed by nearly 4 points before testing a sell signal down to 2719.50. But fidgety shorts overwhelmed the position-squaring window which surged 10 points into the cash session close and added 3 more into the futures close.

The second consecutive higher close above 2684.00 makes 2753.00-2757.00 even likelier. The WedEX is unaffected and remains intact, likely to influence Friday afternoon and Monday morning bullishly. Meanwhile, a second consecutive afternoon has refused to exploit an opportunity for the rally to rest on its laurels and refuel by trapping shorts, keeping alive the potential for another pullback first.

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