Market Wrap

All of the overnight and intraday sessions following Tuesday’s plunge were spent in negative territory. Sharply lower lows were probed during both. Each bounced only to attack or to pierce Tuesday’s low. Even the late rally stopped 1 tick short of filling the gap back up to Tuesday’s 2472.00-2473.00 close.

It’s definitely pessimism. But is it bearish, or is it only “ineffectual pessimism”?

Remaining glued to Tuesday’s 2467.50 low doesn’t suggest the breaks lower have strong-handed selling sponsorship. The afternoon’s 2462.50 low holding 3 points above the morning’s low doesn’t reflect a lot of new selling pressure.

All of which would have been bullish going forward, until the late rally. While it only attacked yesterday’s close, it did at least attack yesterday’s close. With fresh session highs. Then futures continued climbing to attack 2474.00.

Sellers are too weak-handed to resume the decline without first bouncing, either to 2474.00 or to 2478.00. That said, that WAS said before the late rally had extended so far, and so late as to still be weak-handed. Gapping down Thursday under Wednesday afternoon’s ~2463.00 lows could form a “session-long decline” that launches the next downleg.

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

Monitor overnight Globex trading in the chaRTroom here.

We’ve been here before. We’re back there again, and then some.

We’ve closed sessions with no “unfinished business above” outstanding. Tuesday’s 2488.50 high satisfied the prior high’s retest up to a minimum 2484.00. Overbought RSIs last printed during the noon hour, so don’t require a retest.

This instance has the added bearishness of having formed a “Pivot Reversal” which I describe in detail during the Market Wrap recording. Gapping up above 2478.00 Wednesday would go a long way to invalidating the bearish setup. Along way toward it, but ot all the way, which would be done by closing above 2484.00.

Extending down instead has plenty of unfinished business below. The most central of which is a gap back down to 2425.00, which shouldn’t be filled at this stage unless much lower objectives are in-play.

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

Monitor overnight Globex trading in the chaRTroom here.

It’s difficult for a river to rise higher than its source. Friday afternoon’s narrowing range tried at Sunday night’s open, rallying 5 points to attack Friday morning’s 2477.75 high. But it was retraced overnight, too. Monday morning held at unchanged, and the afternoon eked its way back up to the overnight highs.

All within a 4-point range. At least we were able to label it a “dry cleaners” morning, and to suggest more of the same (i.e. little of anything) that afternoon. The final hour’s entry wasn’t doing anything relevant, other than holding up at session highs. The proximity allowed an otherwise irrelevant blip-up to pierce 2478.00, which was being tested into the close.

Breaking free Tuesday from the range of failed gaps up could begin by trending up overnight. That would be just as vulnerable to another failure, however temporary. Starting from a narrow overnight range would be more capable of trending up intraday. But an opening dip — not too deep — could stretch the rubber band for a post-open surge. Only gapping down under Monday’s 2473.00 lows would be likely to trend down intraday.

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

Monitor overnight Globex trading in the chaRTroom here.

Has the market evolved beyond Pavlov? It keeps gapping up — to the same area, mind you — and then reversing down. Not every day, but most days this week, and most days of the past two weeks. Oh, and the reversals down never extend. They’ve been contained by a series of higher lows with only two exceptions, one being a headline reaction.

Perhaps Pavlov is alive and well… in the Dow. Not the proverbial Dogs of the Dow, far from it. The average has been rallying relentless and substantially during the same period. Although NDX has been flat-to-lower (more flat than lower), the Dow’s outperformance isn’t exactly rotation out of risk. It’s more like becoming the risky index.

Meanwhile, S&Ps are ranging flat-to-higher (more flat than higher) just under the high. Extending down should have happened by new if a new high were going to be avoided. Immediately breaking lower could extend but I would be suspicious. At least some fresh high is likely regardless of the eventual resolution.

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

THERE IS NO SATURDAY REVIEW THIS WEEKEND.

What is responsible for Thursday’s relatively narrow range? That is, until the headline triggered a plunge to the longstanding 2466.50 objective. Anxiousness ahead of Friday morning’s Employment Situation report? While price action can become paralyzed ahead of the report, that doesn’t explain Thursday morning. Regardless, the session fluctuated in a narrowing range that couldn’t start trending either way.

Three prior sessions had reversed down from gapping up, so perhaps the problem was no overnight effort. But the Globex low did touch the bias-down signal, which held. Six of the prior seven sessions had done the same, more than enough conditioning for Pavlovian salivating that accelerates the usual move into an earlier window. Wednesday night’s dip hardly qualifies.

An important point to charting is spotting patterns. An equally important point is spotting deceptive patterns. The latter is easier, because valid patterns often resolve as quickly as they form. False patterns make sure that everyone is convinced. So, while the past week seems to have formed an Ascending Triangle, that was complete well before now.

Breaking higher Friday would be possible, but suspicious. Breaking lower would be likelier, even if also only so far for the day.

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

Monitor overnight Globex trading in the chaRTroom here.