Market Wrap

[Market Wrap was held 30 minutes early because I had to leave the screens for Tuesday’s last half-hour.]

North Korea’s actions served as an external catalyst to accomplish what the ongoing decline was already seeking to do organically. That pushed the decline’s sponsorship to the sidelines. Happily, since being strong-handed sellers, they prefer selling into strength. Which is what they got, since no more missiles meant no reinforcements to the knee-jerk reaction selling. [Click here for a video description of that analysis.]

So, the new question is when and where will strong-handed sellers start creeping back in? Filling the gap back up to Monday’s ~2443.50 close neutralized its attraction above. But it was attacked and tested so hesitatingly as to suggest it contained enough pessimism to fuel a bigger bounce. The next higher resistance at 2448.00.was tested intraday without closing above it. And the close wasn’t back under 2438.00, which would have signaled the bounce was done.

Wednesday can still extend through the 2454.00 upper-end of last Wednesday-Friday’s range to test 2461.00. And still qualify as a correction. But gapping down Wednesday under 2438.00 would invalidate by proxy Tuesday’s recovery. Fresh lows targeting 2411.75 and sub-2400.00 would be in-play — and probably no longer offering much support.

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

Monitor overnight Globex trading in the chaRTroom here.

Monday’s open mirrored Friday’s gap up, in that both were too shallow to be maintained. At least Friday’s gap up extended higher before reversing into negative territory. Monday’s gap up began reversing down immediately, also eventually probing negative territory.

Negative territory was probed down to 2438.00. That’s relevant support, but it already had an opportunity to launch a recovery. Testing it during the noon hour does keep open the door to recovery, but doesn’t relieve it from needing to gap up. Otherwise, there’s no bullish reason to have retested 2438.00, and its break would target 2427.25-2429.00.

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

Monitor overnight Globex trading in the chaRTroom here.

Friday afternoon’s 2447.75 bias-up signal defined the no-bias environment’s upper-end. Touching it held through the window lapsing. The ECB’s Draghi started speaking and shook price loose. A blip-up to 2449.50 stretched the rubber band to snap back down into the close. Dropping to 2441.50 actually went out testing 2443.00, avoiding any signal.

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

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“Unfinished business below” left outstanding at Monday’s 2414.25 bias-down target got company of sorts Thursday. The morning’s 2434.50 low was accompanied by simultaneously oversold 1-minute and 3-minute RSIs, which requires its eventual retest.

That retest might be done soon. Dipping deeper to 2438.00 Thursday could have served as the pullback’s low. Perhaps it has, but now Friday’s open must gap up at least above the afternoon’s 2444.00 high, and quickly extend above 2446.50. Otherwise, Monday’s 2429.00 “lower prior highs” are the next lower attraction.

And there’s no assurance of holding the next lower attraction, or its room for noise down to 2427.25. The impending weekend’s Friday Factors could exacerbate a morning drop to also test Monday’s “unfinished business below” and lower. Rallying would target the gap fill up to Tuesday’s 2451.50 cash session close and probably higher to also test 2461.00.

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

Monitor overnight Globex trading in the chaRTroom here.

Tuesday night’s drop measured 14 points from its early high to last-minute low. The open’s blip-down was momentarily another couple of points. The rest of Wednesday’s post-open action was less decisive. Bouncing 7 points through the morning was retraced 5 points through the afternoon, followed by another shallower reversal.

Was Wednesday’s action a pullback that consolidated Tuesday’s rally? This would allow one more upleg to develop that completes the correction off of Monday morning’s low. The upside potential to 2461.00 must still navigate the gap back up to Tuesday’s 2451.25 close, where resistance could already launch the next downleg.Gapping down Thursday would find little support at 2438.00 whose break would target Monday’s 2429.00 highs. A corrective bounce there would likely resolve down into the weekend.

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

Monitor overnight Globex trading in the chaRTroom here.