Market Wrap

Wednesday’s early probe of fresh highs and its reaction down had fulfilled that much of the bearish template, the same bearish template that could have applied Tuesday. Anyway, the open’s spike up also fulfilled the obligatory probe of fresh highs that had become obligatory by having hovered pessimistically short of piercing prior highs.

Holding the early probe also held the 2507.00 bias-up signal which put into play an offsetting test of the 2498.00 bias-down signal. Becoming “unfinished business below” may have enabled 2498.00 to attract price down later. The FOMC policy statement’s reaction eventually slid to 2494.00.

The low also tested the upper-end of last week’s narrow consolidation. Its “lower prior highs” at 2494.50 offered support coming out of the afternoon bias environment that eventually attacked the open’s high to within 3 ticks at 2506.50. That was only ticks above unchanged, and only reached when the positions-squaring window was lapsing. Not being very decisive makes the close not very reliable for signaling higher highs.

Meanwhile, Thursday’s volume is likely to dip as is usual for Rosh Hashanah, the Jewish New Year. Even if we knew with complete certainty the pattern would resolve down, contracting volume could allow price to probe higher. Even if only intraday.

L’Shana Tovah to subscribers celebrating the New Year!

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

Monitor overnight Globex trading in the chaRTroom here.

The shift to weak-handed buyers that was signaled Monday afternoon hasn’t yet had an obvious effect on the rally.  Perhaps Tuesday’s range bound session is the only evidence that we’ve entered a distributive phase. Monday had probed another fresh high, recovering from a mid-day slide, and Tuesday hovered under Monday’s highs.

But hovering just under Monday’s highs does all but require actually probing them. (The late touch of Monday’s 2506.00 high is the same thing.) For all the time stopping pessimistically short, at least an obligatory probe higher is likely. Even the most bearish scenario should pro would be well served by trapping weak-handed buyers at an extreme.

The bearish scenario should do that in the morning, so its rejection could begin in time to be sponsored by strong-handed sellers. Tuesday didn’t do that. Wednesday still can. But probing prior highs doesn’t ensure they’ll hold and reverse price down — especially when the prior session failed to exploit exactly that opportunity.

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

Monitor overnight Globex trading in the chaRTroom here.

This is getting terribly interesting.

Friday’s new trend high close had created the requirement for at least one more eventual new trend high close. Monday has already fulfilled it. It was fulfilled by a late bounce that followed sellers attracting strong-handed reinforcements. So, presumably, Monday’s new trend high close was produced by weak hands.

The late bounce also retested the 2501.00 gap up. The bounce originated from touching Friday’s 2498.00 high, neutralizing the opening gap’s attraction above. Again, neutralizing the attraction above with weak-handed sponsorship

This is not necessarily bearish. But it is not bullish, and avoiding a detour down might depend on extending the rally Tuesday without delay. Already reversing down at Tuesday morning’s bias environment exit would be bearish.

Meanwhile, the three-index comparison we discussed during this weekend’s Saturday Review saw NDX diverge for a second consecutive session. And the Dow extended sharply higher again. Speculation is rotating into safety, adding to the rally’s vulnerability.

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

Monitor overnight Globex trading in the chaRTroom here.

Thursday’s post-close plunge was “the other shoe to drop.” The session had been greeted by N. Korea preparing a launch, so it was a nicely book-ended by the actual launch. Friday’s open was greeted with almost a complete recovery of the second plunge. It was extended back to prior highs during the morning, and to new highs into the close.

The new high close fulfilled the minimum requirement that was created by Tuesday’s confirmed breakout, which had required an eventual higher close. It was barely replaced by a new trend high close on a Friday, a setup that also requires an eventual higher close. Expirations don’t normally coincide with trend changes, anyway.

Meanwhile, the passively bullish WedEX was influential Friday afternoon. So, it’s likely to be influential Monday morning, too. We’ll discuss the specifics of that setup, and other analytical observations, during this weekend’s Saturday Review at 9:30. ITS URL IS CHANGING, so be sure to login from the email you’ll receive in the morning.

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

Recovering Thursday’s pre-open plunge was the easy part. It was a knee-jerk reaction to a headline. Not an inconsequential news item — impending missile launch by N. Korea — but sold by weak-handed sponsorship. Recovering it, and reversing to fresh highs was the natural evolution.

Extending higher would be difficult while the N. Korea launch was hanging over its head. But the balance of the session only ranged narrowly sideways, similar to the overnight action. Would the rest of the session looked any different if not for the missile rumor?

Fears subside, and no overnight launch might allow Friday to probe fresh highs. Friday afternoon’s bullish WedEX influence could allow morning strength to be maintained or extended to 2500.00-2501.00. The afternoon bullish influence could also enable recovering a morning drop. Breaking down to 2489.00 would likely break lower, potentially to 2477.00. That would have be done quickly to allow time for recovering in the afternoon.

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

Monitor overnight Globex trading in the chaRTroom here.