Market Wrap

The next major objective above 2631.75 was 2657.25. The former was met Wednesday. The latter was met Thursday. That’s a lot of ground to cover and a lot of buying pressure to expend in so short of a time. But that’s not necessarily bearish.

Thursday already corrected to some degree. the afternoon dropped 16-1/2 points to test 2642.00. And its late reaction up was retraced entirely. A lot of the overbought condition was relieved. But that’s not necessarily bullish.

The late reaction up could have recovered 2651.00 to maintain the trend’s momentum. Essentially, closing back in the orbit of the 2658.25 high would have made its retest likely. But 2651.00 wasn’t recovered. And it wasn’t for lack of timing or proximity, having probed it by almost 1 point within 10 minutes of the close. Producing all but one element of a setup can be as bearish as the completed setup would have been bullish.

As with Thursday’s open, trending back up Friday all but requires starting by gapping up. Regardless, having held a test of 2657.25, the burden of proof is only buyers. The most bullish scenario may be to not delay extending Thursday afternoon’s slide, to finish correcting.

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

Monitor overnight Globex trading in the chaRTroom here.

Tuesday’s rally didn’t need the endorsement of extending higher ahead of Wednesday’s open, and then surging higher through it. Slowly resuming the rally would have been bullish, too. Any setup would have pointed higher so long as no window was allowed to back-and-fill into negative territory — specifically under Tuesday afternoon’s 2623.00 prior low.

Wednesday’s surge fulfilled upside potential by testing its 2633.50 bias-up target. While that satisfied buying pressure, its sponsorship proved impatient by not at least triggering the 2628.50 bias-up signal. The consequence was to probe under Tuesday afternoon’s 2623.00 prior low.

Backing-and-filling was actually the immediate consequence to rejecting the open’s surge. But probing under 2623.00 didn’t begin until the morning’s bias environment began lapsing. And 2623.00 was recovered as the noon hour began, holding several tests as support through the afternoon. A final attempt during the 3:10-3:20 proxy window failed to maintain its probe under Tuesday afternoon’s 2623.00 prior low.

Absorbing the morning’s drop should have earned its own reward, to recover the morning’s high. Unless Thursday’s open were to gap up, only ranging sideways all Wednesday afternoon suggests that a fresh low is still coming first, e.g. the morning’s 2617.50 outstanding bias objective. Isolating any fresh low to an irrelevant window would end the pullback and allow the rally to resume. Otherwise, a deeper pullback is underway.

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

Monitor overnight Globex trading in the chaRTroom here.

Greeting Tuesday’s open at or above all prior highs needed to reverse down quickly, if the morning were going to reverse down at all. But the opening 15 minutes of volatility probed a fresh high instead, albeit momentarily. And the alternative to reversing down was to trend up, which became increasingly likely as selling failed to materialize.

Recent optimism has been characterized by shallow consolidations and gaps up that don’t trend intraday. That optimistic environment combined with the session’s bias-up targets to produce another optimistic session, as defined by its substantial relentless uplegs. That difference in character is obvious. Tuesday’s bigger difference is that now the optimism is obvious, and backing-and-filling would be a sign of weakness.

Meanwhile, this leg has room up to 2631.75, and the rally has potential up to 2657.25. Neither of which is assured, especially if pushback on Wednesday is substantial.

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

Monitor overnight Globex trading in the chaRTroom here.

After Friday’s close I noted the potential downside of a misstep to the rally at these levels and at this time. What’s a misstep? Monday’s opening surge probed a new high, and didn’t maintain it. Like that.

Sellers exploited the misstep by collapsing 6-1/2 points down to 2597.75. They could have exploited more, and didn’t. That only attacked the overnight low. And an offsetting test of the morning’s 2596.50 bias-down signal (at the overnight low) was outstanding. Not trending down deeper didn’t react up by very much. A very narrow 6-tick range developed around the 2601.75 open since exiting the noon hour.

The week was entered without there being any “unfinished business.” Now there is, and it is below the market. Its test could be neutralized overnight, which may be the only way to retest Sunday night’s low without triggering a top.

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

Monitor overnight Globex trading in the chaRTroom here.

The first hour’s signs of inertia around the 2600.50 open could have restrained any trending attempt Friday. Or, the influence could have doomed a trending attempt to failure. Gapping up to test new highs isn’t likely to sit still, and Friday’s session did not. So, the inertia signal’s latter influence enabled reactions down to 2600.00 after touching a new high at 2603.00.

The morning’s 2604.50 bias-up target wasn’t tested, and neither was it rejected. But being the product of a shortened-session, it does not become “unfinished business above.” It’s still likely to be attacked or tested anyway while probing above Friday’s range, so long as a pullback were to hold 2597.00 (+/- 1 tick). Holidays aren’t generally associated with extremes.

No pattern or other objective is currently in-play. Friday’s new trend high close doesn’t require another, since it was produced by a shortened session. But that doesn’t preclude probing a new trend extreme intraday. Meanwhile, the slightest misstep after trying to extend the rally could result in a sudden drop back to — and potentially through — two-week old lows.

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

Reminder: There is NO Saturday Review this weekend. The chaRTroom will re-open with Globex at 6:00 PM ET Sunday. Enjoy the weekend!