Market Wrap

The overnight recovery to 2826.00 was essentially a repeat of the prior night’s recovery to 2825.00. Both were reversed down sharply before their opens. But Friday’s collapse held up enough to trigger bias-up, producing a very productive rally that included the likely reward for retesting the pre-open high — surging up to the 2831.00 area, and extending during the noon hour to 2836.50.

Meanwhile, Friday afternoon’s bias-up triggered, leaving outstanding its 2838.25 bias-up target. Which is not invalidated. The afternoon’s attacked 2826.00, which already raises the degree of difficulty in neutralizing the “unfinished business” above. Now add to it that the afternoon’s pessimism confirms the bearish WedEX will influence Monday morning. The question is whether the likely post-open slide is preceded by gapping up.

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Would Thursday have probed above 2824.00-2825.00 resistance? China trade news converted an overnight rally into an opening deficit, and the balance of the session was stuck to the new paradigm. Dips to 2808.50 and 2811.00 were recovered back into the range, but never reversed into positive territory — except once up to 2821.00, but only briefly as the morning’s bias environment began lapsing. The afternoon was spent backing and filling.

Dips all recovered into the range. Except for the last one, but it had begun too late to be predictive. Opening Friday firmly enough or already high enough — at least attacking Thursday afternoon’s 2817.00 high — would be likely to retest Wednesday’s 2826.50 high, perhaps higher above 2831.00. Any early fresh high would be vulnerable to reversing down sharply through the afternoon.

Probing lower overnight or post-open would be attracted to Thursday morning’s outstanding 2806.25 bias-down target. Its “unfinished business” requires retest. The likely attraction to “lower prior highs” at 2801.00 is not required, but likely. But its test is likely to hold. Ending the week any lower than that would be bearish, and vulnerable to extending down more sharply.

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Tuesday night’s dip to 2785.50 had already begun recovering by midnight and was largely recovered before Europe’s opens. The intraday attempts to probe the 2803.00 area to 2811.25-2812.00 remained intact. Reversing down from there was a vulnerability so long as it wasn’t approached aggressively. But it was, and it was exceeded up to 2826.50.

That was the afternoon’s peak. The rally had otherwise ended with the morning’s bias environment. Its break higher from a Complex Inverted Head & Shoulders was doomed to failure, even if not attempted during a no-bias environment. Its reversal tested 2814.00 as support, and the final hour ranged sideways back up to 2820.00.

Closing above the Head & Shoulders 2824.00-2825.00 resistance would have been bullish, suggesting the bearish pattern had run its course. Gapping up above it would serve by proxy to form a bullish WedEX, which is otherwise bearish for Wednesday having been contained within last Monday’s range. Regardless, as I began discussing last month, I’m reviewing the indicator as being influential only to Monday mornings, depending upon the Friday afternoon price action input. None of which applies after Thursday’s open.

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Monday’s excessive optimism had continued its productivity post-close, probing higher overnight to 2799.00. Reacting back down into negative territory at 2785.50 was recovered in time to avoid a bearish opening setup. Its reward was to probe even higher highs attacking 2803.00. But ultimately the opening levels around 2793.00 were retraced. Perhaps anxiousness ahead of the Brexit vote inhibited the extension higher, but then it also limited the reaction down. In any case, Tuesday’s ranging has potential to be probed even higher to 2811.25-2812.00, unless Wednesday’s open has gapped down back under Monday’s 2789.00 high to form an Island Reversal pattern.

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PROGRAMMING SPECIAL ANNOUNCEMENT: I’m hosting a special introductory overview of the If Then method after Wednesday’s close. Onboarding for newer subscribers, refresher for seasoned subscribers, and a good opportunity to focus on strategy and tactics as market volatility begins heating up again… More info to follow.

Gapping up to 2755.00 and trending almost straight up entered the noon hour at 2781.00. The rally’s character changed slightly, more of stair-stepping than relentlessness. But pullbacks weren’t much deeper, and they maintained the ongoing trending series of higher highs and higher lows.

The afternoon’s bias-up signal triggered, missing perhaps the session’s last serious opportunity to reverse the trend down. Meeting the 2788.00 bias-up target didn’t reverse down any more so than the session’s previous consolidations, as the last half-hour hovered at the highs.

Avoiding an intraday correction was Monday’s last bit of excessive optimism. Add it to having gapped up, rallying sharply then relentlessly. None of which equates to being a sell signal. But no “unfinished business” remains outstanding, testing the 2775.00 higher prior lows and the afternoon’s 2788.00 bias-up target.

The bias environment’s 2:30 exit did lapse above the noon hour high, and the 3:10-3:20 proxy window trend to fresh session highs. That’s officially traction. It’s not as reliable since the afternoon bias environment only ranged narrowly around its entry. But not already trending down overnight would be likely to probe higher Tuesday morning.

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