Market Wrap

Recently expanded volatility had suggested the market was beginning to argue more aggressively with itself. More obvious trending attempts would be made, but not necessarily would they succeed. Which is why Thursday’s “dry cleaners morning” was surprising.

The balance of the session compensated. Hardly waiting for the bias environment to come within view of lapsing, the otherwise narrow range started sliding from 2671.00 down to 2664.50. Its 61.8% retracement up to 2668.50 reversed down through the noon hour, triggered noN-bias, and extended down through the bias environment to 2654.75.

Oversold RSIs at the low didn’t prevent bouncing 7 points to attack 2662.00. That was only 2-4 points short of levels whose recovery through the close would have been a compelling hold-long. That’s one way to reverse up. But the last half-hour dropped to retest the low and neutralize its oversold RSIs. That’s another way to reverse up — if followed by recovering a relevant resistance.

And that’s the missing ingredient to a rally — a buy signal. “Unfinished business above” at 2677.75 is already outstanding. That’s *only* 20 points above, with a bearish WedEX afternoon impending. The most credible catalyst would be a reversal of the news that supposedly triggered Thursday’s drop. Not yet recovering through the morning would be difficult to recover before Monday afternoon.

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

Unlike the week’s rally so far, Wednesday’s probe of fresh highs was the first optimistic effort that followed some semblance of refueling. Even that was wanting, being an overnight dip. At least the pullback was isolated, and it recovered from testing relevant support at 2660.50. But that optimism bordered on excessive again by surging through the open to probe new highs.

At least bias-up was triggered to create an upside objective. Wednesday morning’s 2677.75 bias-up target was attacked to within 3 points before dropping 8 points through the noon hour. The second correction in 24 hours was rewarded when the FOMC policy statement triggered a spike up to attack the morning’s highs. Hovering pessimistically short into the final hour broke lower again, to fresh session lows attacking 2666.00.

Choppy action in a relatively narrow range suggests a more durable trending attempt coming. Wednesday’s late break was a glimpse, whether of its direction or of the trending intent. This week is expiration, and the WedEX signal has triggered “passive bearish,” so volatility should persist.

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

Monday’s late surge to fresh highs at 2667.25 was followed by Tuesday’s early surge to 2673.00. Both relevant levels, both fulfilling more and more buying pressure. And that’s after Monday morning’s surge to the 2660.50 target.

Pullbacks in between were shallow. So, no new buying pressure was created in between targets. Yet, the rally extended higher anyway. This is optimism — not necessarily excessive, but vulnerable nonetheless to suddenly realizing it has no sponsorship or reinforcements.

Tuesday became doubly inhibited by Wednesday’s impending news. Overnight results from a Senate vote that could impact tax reform’s chances, and the afternoon’s FOMC events. And once again, there is no “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.

Did Monday’s pre-open terror attack upset the timing for a top? Did it prevent topping in this area?

Knee-jerk reactions to headlines are by definition weak-handed sponsorship. They are usually retraced entirely to their origin. Even if strong-handed trending were already underway in that direction, they’ll get out of the way for the natural reaction. Which is what happened to Monday morning’s 5-point collapse to 2652.25. The attraction to “unfinished business above” at 2660.50 outstanding from Friday helped.

In fact, 2660.50 was the morning’s high. But rather than test it at the open like a common Monday template, fresh highs were maintained. This attracts reinforcements, and adds sponsorship for extending to 2667.25. It might have helped the afternoon avoid collapsing when bias-up failed to trigger. And it might be helping post-close action surge to 2667.25.

Any higher would next target 2673.00. Meanwhile, the burden of proof is on this post-close surge extending — and not being rejected overnight. Replacing pre-open weak-handed pessimism with post-close weak-handed optimism leaves the market as vulnerable to reversing direction again.

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

Friday morning contained and constrained the market in a relatively narrow 2647.75-2651.25 range. The noon hour wasn’t entered any higher, but the afternoon bias environment entry sustained a breakout. And it triggered bias-up, putting into play its 2660.50 target.

Not that the balance of the session exploited any of that. The bias environment exit dipped back into the range’s 61.8% retracement at 2649.25. The proxy window came and went without extending deeper. The morning range’s upper-end was pierced, but not really probed again until coming to within 3 minutes of the cash session close.

So, ending the day by piercing a fresh high up to 2655.00 doesn’t make the rally any likelier to extend immediately. But the new “unfinished business above” at 2660.50 helps, and could extend higher without delay. Thursday’s 2642.00 “lower prior highs” would likely recover from a pullback’s test, but not from gapping down any lower.

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

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