Market Wrap

Gapping down ahead of 2 days illiquidity can get ahead of itself, which seems to have been the case Friday. The first hour’s five 15-minute checkpoints overlapped the same relevant level to signal a Dry Cleaners morning. So, trending was limited to retracing the morning’s high back down to the morning’s low, and then to surging through the close to fresh session highs at 2752.00. Friday’s 2732.00 gap down under all prior lows will want to be retested from above, which hasn’t yet been done since probing back into a prior session’s range. That would be vulnerable to extending under Friday’s test of 2727.25 down to 2720.50 — possibly compensating for their delay by tumbling more aggressively or probing more deeply Monday.

Details and other markets coverage are discussed in the post-market Wrap recording here.
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[Rolling coverage forward to Jun which presently trades at a 5.25 premium to Mar]…

Friday is not lacking for a catalyst to keep alive volatility and trending. It’s being greeted at fresh three-week lows, with a lot of downside momentum, and two days of illiquidity are fast-approaching. Should be fun.

Thursday night’s lowest lows in three weeks at 2766.75 basis Jun (2761.50 basis Mar) wasn’t the market hunkering down defensively ahead of the day’s ECB events. It was chipping away at support, as if any remained. Both the likelihood for attempting to isolate the fresh lows, and the likelihood for the attempt to fail, were already obvious before the open. A bounce barely attacked 2782.25 (2777.00) before beginning to collapse into and out of the open.

Simply by revisiting 2782.25 (2777.00) Wednesday, the next lower objective at 2758.75 (2753.50) was put into play. Thursday’s 10:15 bias timing window had blown through it to the collapse’s 2747.00 (2741.75) low. Stair-stepping back up to 2766.25 (2761.00) through the noon hour narrowly avoided triggering bias-up, which defaulted to begin trending back down to fresh session lows.

Fresh session lows began the trek to the next lower objective at 2739.00 (2733.75), encountering difficult support upon attacking 2743.25 (2738.00 basis Mar). Resolving down would next target 2727.25 and 2720.50 (2722.50 and 2715.25). That’s not necessarily in a straight line, ever — let alone ahead of the likely knee-jerk reaction to tomorrow’s Employment Situation report. There’s meanwhile room for noise up to 2758.75 (2753.50), and higher prior lows at 2775.25 (2770.00).

Details and other markets coverage are discussed in the post-market Wrap recording here.
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Tuesday night’s brief probe under the intraday low down to 2781.50 had been recovered pre-open to test Tuesday’s 2789.00-2792.00 close. Slipping back into negative territory at the open extended down to greet the afternoon bias environment at 2769.50. A 9-point bounce gained no traction, remaining within the noon hour’s range and entering the final hour within the bias environment’s range. Probing fresh lows down to 2768.50 also reacted up, but shallower, barely attacking 2777.00 instead of recovering it.

There was no bullish reason to revisit 2777.00 again. Closing under it maintains the door opened intraday to the next lower objective at 2753.50. No hold-short or hold-long setup could be contemplated at the close, and gapping up Thursday can’t form a session-long rally. Simply gapping up and rallying anyway would leave “unfinished business” below. Somehow isolating an overnight probe of fresh lows could be bullish, but meanwhile would be vulnerable to extending down.

Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.

Despite backing off of its late 2794.50 high to 2792.00, Monday afternoon’s bounce had potential for extending to test 2798.00. It was probed by 1 point overnight and then retraced back down under 2794.50 at Tuesday’s open. A post-open collapse attacked 2783.00 but it recovered just as quickly.

Post-open volatility had developed entirely within Monday’s final hour range, suggesting it was only noise, and warning to be suspicious of trending attempts. The balance of the session ranged choppily, widening to 2788.00-2796.00 only briefly. A late blip-up above 2796.00 was reversed to close back down into negative territory at the 2790.00 cash session close, and futures slid another point.

Although not required or even very likely, it’s a little surprising that Tuesday didn’t at least attack 2803.00-2805.00. Sellers hadn’t exploited the post-open collapse, and intraday opportunities to decline were held, as if stronger-handed sellers are still higher. Even the late 7-1/2 point collapse remained within the range.

The pattern still has no attractions or resolution requirements, whether in terms of price or time. Continue being cautious with entries and sizing. Wednesday’s ADP and EIA should enhance volatility, but we’ll need more evidence of trending.

Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.

The week began with setup examples from its opening tick. Sunday night’s opening tick, which duplicated the prior Sunday’s gap up above all prior highs. That alone would suggest its resolution will be different, since sequential similar setups resolve differently. But they even had the same catalyst. So, the night gradually pulled back from attacking 2820.00 to testing 2810.00.

Another example came from Friday’s attack on last Monday’s 2814.00 high. Attacking it up to 2812.50 could have sufficed, but the session reversed down sharply. The market tends to compensate for delays, so retesting 2814.00 became likely to be probed up to 2817.50. Which Monday’s open twice tested and held.

Like last Monday’s gap up above all prior highs, this week’s 2815.50 opening print would want to be retested from below. Last week’s interim dip took control of the week. Monday’s dip took about 20 minutes. Neutralizing its attraction along with the morning’s 2817.50 bias-up target opened a vulnerability to reversing down.

I had preferred waiting for the overnight high’s retest before considering a sell signal, but no “unfinished business” above made the potential whipsaw worthwhile. And there was only one whipsaw before collapsing from 2810.00 to 2768.00. The afternoon trended back up, retracing half of the post-open drop to 2792.00. Monday’s range encompassed all of the prior 6 sessions, proving this rally has been encountering thin air. Extending any higher overnight would be vulnerable to greeting Tuesday’s open back in decline.

Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.