Market Wrap

Wednesday’s late-morning rally to fresh highs almost came from nowhere. Overnight action was flat-to-lower, the opposite direction from the two prior sessions. Post-open action had extended the overnight dip to 2529.00. Initially. But the morning bias environment ultimately ranged flat-to-higher.

Wednesday afternoon’s failed opportunity to reverse the intraday trend couldn’t have been more productive. Any more productive — probing any lower under 2532.75 — wouldn’t have failed its reversal attempt, and would have ended the day in negative territory. The balance of the session ranged flat-to-higher, until retracing 61.8% of the noon hour’s peak.

Closing above 2532.00 undermines the room for noise above Tuesday morning’s bias-up signal, which was allowable while detouring away from fulfilling its 2520.25 objective.

There’s no less vulnerability Thursday to breaking lower immediately and trending down intraday. No “unfinished business above” is outstanding to ensure recovering, although a retest of Wednesday’s 2538.00 high would target 2541.50.

Meanwhile, we’re starting to track a potential Up/Down-crash setup. Six consecutive sessions of closing higher is stretching the rubber band to either snap back down or else surge sharply higher. At least 10 sessions are needed for the setup. An 8-day streak from Sep 11 stopped short.

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Monday night’s relentless optimism was relatively shallow. But it would have been labeled as excessive optimism had Tuesday’s open reversed back under the overnight low. It didn’t. The open didn’t do much but fluctuate around the morning’s 2527.50 bias-up signal. Triggering no-bias was almost accidental, considering the narrow aimless ranging.

But an offsetting test of the morning’s 2520.25 bias-down signal was put into play. And it wasn’t invalidated, so it became “unfinished business below.”

Those “unfinished business belows” are adding up, not unlike a monthly bar tab that suddenly comes due. Under 2520.25 is Monday morning’s no-bias trending retracement from 2509.50. And potentially lower.

Meanwhile, Tuesday’s rally held a test of the morning’s 2532.00 bias-up target. It was never put into play, but as long as it’s being tested, it should define the detour before fulfilling the 2520.25 bias objective. Having trended up into Tuesday’s close, gapping down Wednesday under Tuesday afternoon’s 2528.50 low could form a “session-long decline.” The trend otherwise remains up, next targeting 2541.50.

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Simultaneously overbought 1-minute and 3-minute RSIs at Monday morning’s 2525.75 high helped to recover from its reaction down to 2519.00. That had been the minimum corrective pullback target, and its test was complete. So, we know its recovery isn’t arbitrary. The sponsorship that had produced the morning’s high didn’t sponsor its retest.

2525.75 wasn’t recovered completely until Monday’s final minutes. And not for lack of proximity. Exiting the afternoon bias environment only hovered pessimistically short just under the morning’s high. Then only a later surge pierced a fresh high at 2527.00.

RSIs did not return to overbought territory. Monday’s new trend high close already fulfilled that requirement which was created Friday. There is no “unfinished business above,” and gapping down under 2522.00 or 2519.25 would be credible for trending back down.

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

Monitor overnight Globex trading in the chaRTroom here.

The afternoon’s noN-bias environment reacted down from the noon hour’s 2515.50 high. A sell signal at 2512.50 was touched, but not pierced, avoiding a break lower. The morning’s 8-10 point rally was vulnerable to an afternoon break lower, but there was no shortage of optimism to prevent it.

Optimism aside, there is “unfinished business below.” The morning’s rally was “no-bias trending” above its 2509.50 bias-up signal. Its retracement is required, if not also the 10:15 bias timing window’s 2408.00 print. As an example, Wednesday’s no-bias trending was retraced overnight, and held as support. Retracing Friday’s no-bias trending need not hold.

Meanwhile, Friday’s new trend high close entrenches the rally. At least one more new trend high close is required. That doesn’t prevent an immediate pullback, whether lasting multiple hour or multiple days. It only prevents an immediate pullback from extending down durably.

Lower-volume sessions can cut either way. Friday afternoon’s dwindling participation ahead of the Yom Kippur holiday may have prevented the morning’s rally from extending. It also could have enabled its retracement. Monday’s higher-volume session will be more telling.

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

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Thursday’s buyers didn’t need to be weak-handed. The prior session had probed new highs, and overnight action had neutralized “unfinished business below.” And it was neutralized by a break lower that originated too late to be credible for extending down. There was no attraction above, yet Thursday was biased upward, trending up intraday.

Inside days that are biased upward are often the product of weak-handed sponsorship. Their resolution is often to reverse down, having expended buying pressure the prior day without gaining traction for the effort. Avoiding a resolution down depends essentially on attracting reinforcements, which should be obvious by gapping up Thursday.

Resolving down is likelier, for the same reason that rallying Thursday was unlikely — because Wednesday’s new highs were reversed to close under prior highs. We’ll still give a gap up a benefit of the doubt for extending higher, but trending down is likely if not gapping up.

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

Monitor overnight Globex trading in the chaRTroom here.