Market Wrap

It’s going to take a lot more to kill this rally than the Dow plunging 385 points, and S&Ps down 39 points from high to low. Not a lot more, not if the market really wants it.

Not because so much energy has been expended already — Tuesday’s close was under Friday’s “lower prior highs,” so sellers did gain traction, keeping the door open to extending down Wednesday. But “unfinished business above” at Monday’s 2801.00 open should be retested before any durable decline.

Also still outstanding is a new trend high close as became required by Friday’s. And the ongoing series of higher highs and higher lows remains intact. Although sizeable by any measure, Tuesday’s plunge didn’t threaten the last relative low. Regardless, extending down without delay would next target lower prior highs at  2760.00 and 2750.00.

This being expiration week (and WedEX about to trigger), volatility at new highs can cut both ways, in sequence. With sellers having gained traction, rallying immediately Wednesday all but requires gapping up, which expiration volatility could easily accommodate. Filling the gap back to Tuesday’s open could easily probe the 2808.50 high, too.

A couple of other attractions may be influential. Tuesday afternoon’s late no-bias trending almost requires retesting its 2790.50 bias-down signal. And oversold RSIs at Tuesday’s low require retesting its 2769.25 low.

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

Friday’s new trend extreme close at 2786.50 was back within the afternoon bias environment’s range, which does undermine its near-term upside momentum slightly. Similarly, recovering through the close up to 2789.00 doesn’t reinforce the upside momentum.

Regardless, the requirement for at least another eventual higher trend extreme close is not affected. But that is basis U.S. regular trading hours.

That opens a window for a global pullback Monday while participation is suppressed. Only ranging choppily through the afternoon around the morning’s 2785.75 high doesn’t reinforce upside momentum — again, regardless of having surged during the position-squaring window.

My big question is regarding Tuesday’s “top” when its new trend highs were book-ended by closing essentially flat with the open’s 2751.00 gap up. The setup tends to precede a reversal, which there was on Wednesday. But that organic setup was overcome artificially, as weak-handed sellers reacted to news headlines. If the prerequisite recovery triggered a short-squeeze, then a strap in tight.

The chaRTroom will re-open Sunday night at with Globex. I’ll monitor for pullback setups. There probably won’t be much to do if the rally only resumes. Enjoy the weekend!

• Details and other markets coverage are discussed in the post-market Wrap recording here.
• This being a holiday weekend, there is NO Saturday Review.
  

Gapping up Thursday above the morning’s 2752.00 bias-up signal had rejected Wednesday’s inability to recover positive territory. And it also created the consequence of retesting Tuesday’s 2760.00 high. There was already an attraction above at 2765.25, which the morning’s wide swings all but required being met. Two afternoon timing windows tested and retested it, dipping 3 points in the interim. But it was the position-squaring window that finally broke higher. The cash session closed equated to 2768.50 and futures extended another 6 ticks higher through the close.

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

Neither of Wednesday afternoon’s bias signals was even attacked before triggering no-bias. But the morning’s retracement continued firming and attacked the 2752.00 bias-up signal to within 1 tick. Would it have broken higher, if not for rumors of US announcing withdrawal from Nafta?

Already reacting down 2 points, the headline triggered a drop that ultimately tested the 2745.25 bias-down signal by 4-5 ticks. The drop began early enough to attract strong-handed reinforcements, but never did.

Wednesday afternoon’s drop was retraced almost entirely up to 2751.00 through the futures close. Expending buying pressure during that otherwise irrelevant window suggests that buyers are weak-handed. Gapping up to trigger bias-up Thursday would at least retest Tuesday’s highs, but otherwise another downdraft would target 2730.75.

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

Tuesday’s overnight range broke higher very near the open, which is usually unsustainable. In fact, it was retraced back down to “lower prior highs” at 2748.00 from 2753.50. That opening range was round-tripped once more but never probed any lower. And there was still time for the bias environment to fulfill its 2757.50 bias-up target by 1 point.

The afternoon bias environment probed higher to 2760.00 but was exited under the morning’s highs. Selling resumed, although signals were slow to extend, but ultimately retested the 2751.00 opening print. Similar opening and closing levels at a new extreme often identify that extreme as being durable. So, any distributive or reversing price action will be that much more credible.

Meanwhile, there’s Tuesday afternoon’s bias-up. It triggered, barely, after barely invoking the grace period. And it barely printed a higher high. But however shallow, it did print a higher high, and the opportunity to reject it was not exploited. So its 2765.25 bias-up target barely becomes “unfinished business above.”

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