Market Wrap

Firming since Wednesday’s open greeted the afternoon’s FOMC Minutes near the 2551.00 session highs. A delayed surge collapsed. A very shallower delayed surge to only 2552.00. And relatively collapsed, only 3 points to 2449.00.

The setup was smaller and later than Monday and Tuesday’s gaps up that both collapsed more substantially. But it was similarly distribution. And its collapse also held at or above relevant support to avoid reversing the trend down.

Monday and Tuesday’s collapses were retraced entirely the following day. Wednesday’s was retraced already, back to Tuesday’s 2553.00 high. Another 4 points higher is likely, but still vulnerable to the same distributive template that triggered reversals down.

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Tuesday’s repeat of Monday’s opening pattern — gap up, collapse down — confirms the potential for a significant peak in this area. Tuesday’s open included the 2552.00 objective that Monday’s open had missed before reversing down. Consequently, no “unfinished business above” remains outstanding.

But while there’s no active attraction above, there’s no reversal signaled below. Relevant levels have held their tests as support, or simply not been challenged through the close. Sellers aren’t gaining any traction for their efforts.

The rally could resume simply by testing Tuesday’s opening highs, and not quickly reversing down. Meanwhile, almost any probe under Tuesday’s lows would start to roll over the edge, and threaten to signal a trend change by the close.

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

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Did the ongoing rally just save itself from disaster? The Up/Down-crash now has two consecutive session not closing higher. The rubber band isn’t being stretched so tightly that it must snap back down — ranging flat-to-lower Friday and Monday have let off some of the rally’s steam.

Of course, that addresses the setup’s “Down” result. It also has potential for “Up,” or had. Losing its count before reaching the 10th session has also lessened potential for exploding higher. Fresh highs remain likely, if only to neutralize the “unfinished business above” at 2552.00. A crash isn’t the only way to react down.

Monday’s open was tracking a template for probing a fresh high, perhaps up to 2552.00, before reacting down sharply. Done early enough, that could have fulfilled selling pressure in time to recover into the close. But the open stopped pessimistically short. And a recovery was inhibited by the attraction back down to oversold RSIs at the morning’s 2543.50 low, and to testing the morning’s 2541.00 bias objective.

Monday’s late drop fulfilled those, while creating a new attraction to 2539.25. A late bounce didn’t recover 2543.50 in time to invalidate the downside momentum, which could extend to 2536.00 (+/- 5 ticks) even if only overnight. Rallying Tuesday morning would all but require gapping up to be credible for extending.

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

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Thanks to Thursday morning’s substantial rally, plenty of room had been created to expend selling pressure without it damaging the chart pattern. Friday’s reaction down to the pre-open Employment Situation report held tests of the 2543.00 pullback limit. That’s a reasonable amount of selling pressure to expend without even threatening to reverse the trend down.

That said, the timing of Friday morning’s low – that is, still testing 2543.00 into the noon hour without yet recovering — does keep alive some vulnerability to probing lower. But the origin of probing lower would now still be from a position of strength, having failed to exploit the opportunity for trending down Friday.

Meanwhile, Thursday’s “unfinished business above” at 2552.00 remains outstanding to help attract price higher. A 7-day streak of higher closes has been interrupted by a pullback, which requires Monday to overcome if the Up/Down-crash setup will remain intact.

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

There is NO weekend Saturday Review until next week.

The morning’s rally had gotten exponential, robbing the balance of the session of its momentum. The velocity helped to support the market by the limit orders resting under the market, lying in wait to buy pullbacks. And the afternoon did trigger its 2547.00 bias-up signal. So the attraction to its 2552.00 bias-up target kept the rally aloft.

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

Monitor overnight Globex trading in the chaRTroom here.