Market Wrap

Thursday afternoon’s 2695.50 bias-up signal held its test from 1:20-1:30 to not trigger. But 2688.00-2692.50 was recovered. It could still have been rejected, being only a singular probe above 2688.00-2692.50 and having held bias-up (i.e. relevant resistance through a relevant timing window).

Rejected optimally, by exiting the bias environment back under 2692.50. That was the bias environment exit did test, but it held. Breaking back under the 2691.25 last relative low during another relevant window would still be credible. That was the 3:10-3:20 proxy window. Being a delayed break, it was allowed only one bite at the apple.

The late break eventually pierced 2 ticks under the lower-end of 2688.00-2692.50, telling us several things. Trending isn’t attracting strong-handed reinforcements, but opinions remain widely disparate, and attractions above aren’t overwhelming attractions below.

Gapping up Friday above 2692.50 could reject Thursday’s late slide, and next target new highs at 2699.75-2700.75 and 2703.00. Extending the break under the 2688.00-2692.50 buffer would probe fresh lows under 2679.00 down to 2675.50. Not already trending during the first hour could range only narrowly through the close.

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Wednesday left outstanding two pieces of “unfinished business below.” Oversold RSIs at the morning’s  2679.00 low, and an offsetting test of the morning’s 2675.50 bias-down target. There’s no timing requirement to neutralize their attractions. Rallying while they remain outstanding would be likely to fail. But their tests remain likely so long as 2688.50-2692.00 holds as resistance.

Testing the attractions below need only be done by backing-and-filling, or by a failed attempt to repeat Tuesday and Wednesday morning’s slides. But those slides were injected into a shrinking window of opportunity ahead of the weekend’s seasonal holiday bullishness. Closing the window doesn’t prevent another slide attempt, it only makes the attempt likely to fail.

So, a failed slide is likely to recover to test resistance above. First neutralizing the attractions below would be likelier to recover back up through 2688.50-2692.00 and to new highs above 2700.00 — perhaps into the weekend by then. Meanwhile, gapping up Thursday would have one chance to already rally to new highs, or else stretch the rubber band to probe under Wednesday’s lows.

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Tuesday’s open finally postured defensively ahead of the scheduled afternoon tax reform vote in the House. Sliding 7 points from 2697.25 extended down another 2 points to 2688.00 for the morning low. But the defensive posturing persisted into the noon hour’s 2685.50 lows at the afternoon’s bias-down signal.

Ranging higher into and out of the actual vote held 2690.00 resistance. Defensive posturing was no longer needed. But why not. Fresh lows into the final hour reached 2683.25.

That last low had a bullish purpose which the morning’s drop had tried, and the noon hour drop avoided. It was to stretch the rubber band down so it could snap back up. The morning’s test of 2688.00 never recovered 2692.50, and the noon hour’s low only firmed off of the bias-down signal’s test. The final hour’s low attacked 2688.00 and reacted down entirely.

Tuesday afternoon’s 2690.25 bias environment high is the afternoon’s high, and closing action trended down. So, maintaining a gap up Wednesday above 2690.25 would form a session-long rally setup targeting those evasive new highs. Meanwhile, simply extending down would next target 2675.00, and potentially lower.

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Sponsorship of relentless overnight trending tends either to be overcome through the open, or not. One But extending the overnight trend isn’t required. Monday’s gap up wasn’t overcome through the open, so the session could have extended higher, even though it did not.

Such restrained optimism could be constructive, but at new highs I suspect that buying pressure is waning. Similar to Monday not being required to extend higher, waning upside doesn’t require reversing down. This is more of a re-positioning window. And probing any higher would be vulnerable to failure.

Probing higher before trying to reverse down would be distributive, testing 2699.75-2700.785 or 2703.00. Dipping overnight to 2688.00 could neutralize sellers to enable fresh highs. But breaking under 2688.00 without yet probing above Monday’s high is unlikely to trend down.

The path among those levels will diminish or deplete the excessive optimism ahead of Tuesday’s weighty event, the tax reform vote. Of course, there’s more influencing the market than that, but it probably won’t seem that way into and out of passing the vote, or the vote’s delay, or its failure.

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Did it, or didn’t it? It did. They did.

Gapping up above Thursday’s 2664.00 afternoon bias environment high after trending down into Thursday’s close had formed a “session-long rally” setup. It doesn’t require extending steeply, but this one did. It’s only likely to probe each prior timing window’s high, but one. This one probed them all.

The afternoon bias environment’s low was 2677.25. The bearish WedEX’s influence doesn’t prevent interim rallies. It only requires a downward bias. Friday afternoon’s higher and higher highs were irrelevant, so long as they resolved back under 2677.25. First, upward momentum had to stop, which it when the 3:10-3:20 proxy window was exited at the bias environment’s 2682.25 high. Collapsing 8 points probed 3 points under 2677.25 to 2674.25.

The late drop wasn’t maintained. But 2677.25 wasn’t recovered before coming to within 3 minutes of the cash session close, and then it was only being overlapped. Futures surging back to 2282.50 through settlement was irrelevant.

So, a lot of buying pressure was expended Friday, without gaining traction for the effort. The new trend extreme close on a Friday was almost credible, except for its leg still overlapping Wednesday’s prior high. That only relieves the obligation for at least one more new trend high close, but not necessarily a new intraday high.

seasonal bullishness, downrend near-term

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