Market Wrap

Wednesday morning’s plunge from 2565.00-2566.00 held under 2554.00 for long enough to suggest the decline’s sponsorship was strong-handed. Waiting so long to recover 2554.00 suggested the same, that any rally to any degree — even retesting Sunday night’s highs — would be only temporary.

Recovering from the noon hour’s 2541.50 low peaked at 2556.00-2557.50, which had been the morning decline’s minimum objective. (Reaching 2558.75 came too late to be relevant.) Already having reacted down pre-close, gapping up Thursday is possible and would be credible for extending the recovery. By the same token, gapping back down Thursday would target a retest of Wednesday’s 2541.50 low.

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

Monitor overnight Globex trading in the chaRTroom here.

The gap from Monday’s 2563.50 close is natural support. It was substantial support Tuesday when tested morning by the post-open plunge from 2569.25. Its support protected against extending down to fulfill a test of 2560.25 that had been put into play.

Recovering to 2570.25 didn’t protect against another downdraft, and had started becoming likely. But being triggered by headlines upset the natural timing that would have produced fresh post-open lows. So, 2560.25 becomes “unfinished business below.”

The delay in fulfilling 2560.25 allows more room to test it, such as down to 2556.00-2557.50. There’s still room down to 2554.00 before threatening a deeper detour prior to fulfilling a new trend high close. No further detour is required, and fresh highs could still come first.

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

Monitor overnight Globex trading in the chaRTroom here.

Monday’s 2576.75 opening tick was the session high. Its 4-point dip was recovered to touch the morning’s 2575.75 bias-up signal. Not recovering it put into play a test of 2567.25. Fresh lows during the afternoon bias environment fulfilled it, but that was after the morning’s bearish WedEX influence had lapsed. So, the afternoon’s sellers were different sponsorship. New sponsorship.

Meanwhile, that new sponsorship extended the afternoon’s decline. A simultaneous positive divergence in both 1-minute and 3-minute RSIs was ignored at 2569.00. More strong-handed sponsorship was observed when exiting the bias environment under the noon hour’s low, confirmed by fresh lows through the 3:10-3:20 proxy window. The decline extended to touch last Wednesday and Thursday’s “lower prior highs” at 2562.00.

Monday was an “outside day” which often reflects a near-term trend extreme, usually not extending the reversal immediately. “Unfinished business above” was left outstanding by a requirement for at least one more new trend high close, which the market can ignore during a correction. A slightly lower low under 2560.00 or down to 2556.00 could define the pullback. But Friday’s new high close has been rejected just enough to undermine the next higher objectives.

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

Monitor overnight Globex trading in the chaRTroom here.

What if. What if Thursday’s gap down proxy had not triggered, adjusting WedEX to bearish. Would its original bullish signal have been productive Friday? It’s a fair question, since the afternoon’s 2568.75 bias-up signal triggered, and the close surged to touch its 2573.50 target.

But that surge was last-minute. The bias environment’s 2571.00 entry was being probed down to 2570.00 within 3 minutes of the cash session close, when it mattered. And that would not have qualified as a bullish WedEX. So, we’ll still expect any early downtrending Monday morning to persist through the morning.

Meanwhile, fulfilling 2573.50 left no calculable “unfinished business above.” Wednesday morning’s outstanding bias-up target was fulfilled 10 points lower overnight. Thursday night’s “new Globex trend extreme” was a structural attraction that was neutralized Friday afternoon.

Now a new trend high close on a Friday has created another type of structural unfinished business above. It’s not a retest, but another new trend high close that is all but required — even if Monday were to begin a multi-session pullback. There’s more, and we’ll cover it during Saturday Review…

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

This weekend’s Saturday Review starts at 9:30am ET. I’ll send the link in the morning.

Detour? Refueling? Warning shot across the bow? Thursday’s plunge and then its complete recovery have some important implications…

Thursday’s plunge was all but finished before triggering the morning bias environment signal at 10:15. The balance of the session trended back up. Paradigms shifted quickly:
— After the post-open plunge to 2545.25, the open’s 2550.25 print was recovered before the first hour had ended.
— The open’s 2554.50 peak was attacked to within 1 tick before the morning’s bias environment began lapsing.
— Wednesday’s “higher prior lows” were touched early in the afternoon bias environment.
— And the gap back up to Wednesday’s 2559.50-2560.00 close was filled by the session’s last cash session bar (already attacked to within 3 ticks as the 3:10-3:20 proxy window was ending).

Each stage rewarded buyers for having absorbed sellers, and for a building block to produce the next leg’s improvement. A couple of shortcomings keep the door open to sellers retaking control, similar to Thursday’s gap down by proxy. Also similarly, not gapping down Friday would default to buyers having gained traction for Thursday’s effort.

One caveat to further upside: Opening enthusiasm of gapping up would again be vulnerable to collapse, especially if Wednesday’s 2562.25 and 2563.75 “unfinished business above” were fulfilled. Meanwhile, Wednesday’s lows were only being tested as resistance before Thursday’s close, and not quite recovered, so the morning’s WedEX inversion to passively bearish remains intact. Trending up into the weekend is not at all assured.

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

Monitor overnight Globex trading in the chaRTroom here.