Market Wrap

Monday’s choppy open had set into motion a series of conditions, each of which has developed through Tuesday’s rally. Monday morning’s temporary probe of fresh lows at 2415.75, and extending its recovery through Tuesday’s opening retest of Friday morning’s 2439.50 high, tracked the basic template. Not being rejected early kept the door open to rallying late. Which was done up to 2454.00.

Steep and relentless upside are common characteristics of counter-trending. The counter-trend’s actual size is relevant only to the leg it is correcting. So, whether rallying 38 points is a lot or a little matters far less than Tuesday retracing 61.8% of the last downleg (from Wednesday’s 2474.00 high).

Another interesting feature to Tuesday’s rally was its sponsorship. The open triggered a buy signal at 2435.00 and never looked back. There was no constructive backing-and-filling, or other tactics typically employed by a rally to refuel buyers. It’s less a characteristic of a correction, and more an accident waiting to happen.

Regardless, reversing down still requires an actual sell signal to trigger, and there’s room down to 2438.00 before confirming a new downleg is underway. Meanwhile, the corrective rally is otherwise free to extend higher, next targeting 2461.00.

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

Monitor overnight Globex trading in the chaRTroom here.

Monday’s opening probe under Friday’s low and the overnight low down to 2415.75 was relatively brief. And it was largely retraced up to 2429.50. But it was not rejected, since no relevant level was recovered through any relevant timing window.

A late-afternoon attempt to resume the decline under 2422.75 was retraced by a later-afternoon bounce testing 2428.25. Both levels held, preventing any hold-long or hold-short consideration. So, the decline could continue without further delay. Or it could be retraced a little further to retest Friday morning’s 2439.50 high.

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

Monitor overnight Globex trading in the chaRTroom here.

“Will they, or won’t they” test Thursday night lows was answered without delay Friday, by sliding into and out of the open to fresh lows at 2419.50. The longstanding attraction to 2425.25 was fulfilled along the way. The entire morning consolidated under last Thursday’s 2430.50 overnight low.

That’s an anchor.

Rallying into and out of the bias environment lapsing was extended to a noon hour high at 2439.50. Expending so much buying pressure so quickly made it easy for the WedEX’s bearish influence. But it didn’t ensure it. The afternoon bias environment was entered already back under 2432.00 and probed 4 points lower. Another 4 points lower to 2424.00 were probed into the close.

Friday Factors weren’t necessarily bullish. The morning’s drop was not a failed attempt to trend down, having formed an anchor. That didn’t ensure its retest intraday, let alone its break. But the effort applied to avoiding its test only expended buying pressure without gaining any traction for the effort. And ultimately, closing action dipped into

Meanwhile, the bearish WedEX was influential Friday afternoon. So, we assume it will be influential Monday morning — often, much more so. We’ll discuss that in greater detail during this weekend’s Saturday Review.

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

JOIN US AT 9:30AM ET FOR THIS WEEKEND’S SATURDAY REVIEW. WE’LL DISCUSS THE BIGGER PICTURE AND MONDAY’S OPENING STRATEGY. YOU CAN REQUEST INSTANT ANALYSIS OF ANY CHART. THE LINK WILL BE SENT IN THE MORNING.

Thursday’s drop either ended the decline, or took us to the brink of it getting serious.

This week’s overnight and intraday tests of the 2471.00-2473.50 maximum corrective bounce limits essentially reset last week’s drop from its Pivot Reversal session. It was not just one, but two opportunities for the rally’s sponsorship to reassert itself. Neither was exploited, so the correction’s origin below became the next leg’s target.

Reacting down Wednesday was almost required. Extending down Thursday was more than required. Now almost any delay to extending down would be considered sellers refueling. No delay is required, not without gapping up above Thursday afternoon’s 2445.75 high. Any shallower open — gapping or otherwise — would likely resolve down to 2421.11-2425.25 and possibly lower.

There’s even potential for gapping down under 2411.00 and extending lower from there. It was the least likely of the three likeliest scenarios we discussed during the Saturday Review. It’s still the least likely, but likelier than it was at this price last week. That was after Friday Factors, but now they can help.

Also helpful to the decline is the bearish WedEX that had triggered after Wednesday’s close. Whether it plays itself out already Friday morning, or dooms a bounce to failure Friday afternoon, it reqiures fresh lows at some point.

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

Monitor overnight Globex trading in the chaRTroom here.

The entire bearish scenario played-out Wednesday, to a point. From the first intraday test of 2471.00-2473.50 and holding it, to reversing down into the afternoon, structure and calculation observed the topping template.

But rather develop organically. the reversal down was triggered by headlines. That knee-jerk reaction crowd created an artificial response. It was very productive, but not necessarily strong-handed sponsorship. Dropping down to 2462.50 when the bias environment lapsing came within view did not attract reinforcements when the window’s lapsing actually began.

That’s a bullish setup, and entirely credible in context of the news reaction that crowded out sellers. But the last downleg was only retraced 61.8%, and not actually reversed. So, if sellers don’t retake control overnight, then Wednesday’s highs will be either attacked or retested.

Meanwhile, the WedEX (Wednesday Expiration) signal triggered, passively bearish. I describe why in the Wrap video. Also described there is why the signal can become actively bullish by proxy of gapping up to Wednesday’s highs.

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

Monitor overnight Globex trading in the chaRTroom here.