Market Wrap

For being the eve of the anniversary of 1987’s “Black Monday” market crash, Wednesday wasn’t very intimidating. Gapping up and then ranging exclusively in positive territory doesn’t seem bearish. Perhaps a reversal is trying to ambush the rally.

An ambush is possible. Here’s how…

This being expiration week, the WedEX setup triggered, and its signal is “actively bullish.” That was done by essentially breaking out above a multi-session range, defined by Tuesday’s 2557.25 close. That happens also to be  Wednesday’s 2557.25 low, so gapping down under it Thursday would affect the WedEX signal by proxy, and adjust it to “passively bearish.”

But that’s just regarding WedEX, which only influences Friday afternoon and Monday morning. Due to Wednesday’s last timing window having overlapped the 2561.50, gapping down under Wednesday’s low Thursday would also reverse near-term momentum down.

Those are the bearish scenarios. Meanwhile, two pieces of “unfinished business above” were created Wednesday, and both were left outstanding. The pre-open 2562.25 “new Globex trend extreme, and the morning’s 2563.75 bias-up target. A bearish template is available if they’re fulfilled after gapping down Thursday, but it would take a circus-quality contortionist to qualify.

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

Monitor overnight Globex trading in the chaRTroom here.

Tuesday was a most unattractive session for trading opportunities. But it wasn’t the least attractive opportunity to apply the methodology. One aspect, at least — to know early that it would be a dry cleaners morning (more productive to run errands). The afternoon gave the same signal, and applied until the bias environment began lapsing at 2:30.

That’s precisely when the noon hour’s high was probed. And that probe persisted through the close, touching Monday’s 2557.75 opening high.

Having closed within prior intraday ranging, extending higher Wednesday all but requires maintaining a gap up through the open. The pattern otherwise remains vulnerable to declining immediately — more so a serious attempt at reversing the trend down, and less for backing-and-filling.

On that latter point, note that Tuesday’s close trended up. And also that the afternoon’s 2552.50 low was contained in the bias environment. So, gapping down to and/or through 2552.50 could form a “session-long decline” setup. That’s not the session’s only possible setup, but it makes selling overnight weakness more compelling than buying it.

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

Monitor overnight Globex trading in the chaRTroom here.

Was Monday inhibited by post-close earnings due from NFLX? If so, then it saved the session from trending down. The morning’s failed probe of fresh highs up to 2557.75 had repeated the range’s pattern of collapsing within minutes of an otherwise enthusiastic start. Two more upside attractions had been neutralized. That range had been been flat-to-higher, still probing fresh highs but not closing above relevant resistance.

Also missing from the ranging is a close under a relevant support. The noon hour’s fresh low at 2550.75 held above Friday’s low. And the afternoon recovered gradually into the 2555.50 cash session close. Closing AT Friday’s high once again doesn’t give the rally any new traction. But it can extend so long as relevant support holds.

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

Monitor overnight Globex trading in the chaRTroom here.

Friday morning’s bias environment exit did at least probe back under 2553.25. But it didn’t follow-through into the noon hour’s exit, or under 2550.00. Fluctuating around 2553.25 through the session kept the market in proximity to reverse down. That vulnerability would diminish the later and later that it wasn’t exploited, and ultimately produce only a temporary dip back down to the open’s 2550.50 low. Even after bouncing back into the close, a new trend extreme close on a Friday was avoided. So, the rally isn’t entrenched, but “unfinished business above” is left outstanding at 2556.75 and 2557.00.

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

I’LL DISCUSS MORE ABOUT THIS RANGE, AND IDENTIFY RELEVANT SETUPS AND PRICE LEVELS, AT THIS WEEKEND’S SATURDAY REVIEW. LOOK FOR LOGIN INFO BY MORNING EMAIL.

Thursday’s open was greeted by overnight action having trended down relentlessly. The open didn’t reject it, so sellers were not marginalized despite not extending down. In fact, the 2549.00 bias-down signal held its test as support, putting into play an offsetting test of the 2557.00 bias-up signal. The bounce peaked upon filling the gap back up to Wednesday’s 2553.25 close, which was also Tuesday’s high. So, again, never recovering positive territory kept sellers from becoming marginalized. Meanwhile, the gap’s obligatory, natural resistance — and a negative knee-jerk reaction to who is being interviewed as Yellen’s replacement — pushed price back down to fresh session lows at 2546.25.

Closing under the morning’s low would have gained traction for sellers. For once. Despite the distributive action above, sellers have failed to close under relevant lows. Thursday was another one of those failures. Probing under the morning’s 2547.25 low didn’t hold, and was recovered through the close. The door remains open to probing fresh highs — presumably the 2557.00 unfinished business above. And any fresh high remains vulnerable to reversing back down intraday. The ongoing significance of inflationary data on the Fed’s action plan makes Friday morning’s barrage of consumer data capable of swinging price around in circles. So, multiple directions are possible intraday, especially if the open is trending in one direction or the other.

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

Monitor overnight Globex trading in the chaRTroom here.