Market Wrap

Wednesday behaved like a session-long rally, trending up through every timing window. But the pattern going into the session didn’t allow for that setup. Why would that matter? A session-long rally would be likely to extend the next morning. Thursday might extend anyway, but isn’t required.

The pattern is also behaving like the resolution to an extended narrowing range. That’s when a false break in one direction reverses more substantially in the opposite direction. This is not that, either, since the range off Friday’s high had not narrowed. Why would that matter? Because the more substantial leg’s duration can be timed against the false break. This one would end Thursday in decline.

A setup that is in effect, actually is no longer in effect — Friday’s requirement for a new trend extreme close is now fulfilled. There is no “unfinished business above.” We’ll see how long that lasts. Wednesday was a breakout from a multi-session range, so a second consecutive higher close Thursday would confirm and require yet another higher close. Or more.

Meanwhile, the ongoing template suggests fresh highs will be short-lived. Closing higher Thursday anyway would go a long way to suggesting this breakout could go a long way. Not confirming Wednesday’s breakout Thursday could open the door to reversing down a long way instead.

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

Monitor overnight Globex trading in the chaRTroom here.

Did Friday morning’s 2450.00 “lower prior highs” hold their test as support? That would have been expected if tested Monday morning, the first day retracing the new trend extreme. But the one-day delay had more potential to probe lower — and not just the room for noise down to 2448.25 that defined Tuesday’s low.

Nevertheless, the test resolved up into the noon hour and through the afternoon bias environment exit. The gap back to Monday’s closes was filled up to 2458.50. “Unfinished business above” at 2459.75 was left outstanding, as well as the requirement for a new trend extreme close. And now with the NDX attacking its prior intraday highs, all three major indexes may come in sync with each other so that an apogee can form.

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

Monitor overnight Globex trading in the chaRTroom here.

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

Monitor overnight Globex trading in the chaRTroom here.

It’s not often that a trend has no “unfinished business” outstanding. That was the case Friday afternoon, which met the morning’s 2452.25 bias-up target, the nearly 4-week old 2454.00 bias-up target, and Friday afternoon’s 2456.50 bias-up target to within 3 ticks.

Not often, but not rare.

Rare is that only one setup was available to create new unfinished business above. That would be a new trend high close. And that condition would create new unfinished business only because it was a Friday. New trend high closes during the week don’t have the same relevance.

Other attractions that Friday’s rally neutralized include any prior high that was probed intraday. Which is a risk. Closing above a prior high can be a breakout or be of little significance. But probing a prior high without closing above it can be significant resistance. The rally risked ending with every new high it probed. But it succeeded.

Its last half-hour reaction down from 2461.25 to 2455.00 let sellers do the same thing with support as buyers did with resistance. The afternoon rally’s last relative low was pierced by the session’s final bar. While that was too late for its break to be relevant, it’s still a failed attempt. Still, closing at the 2456.50 room for noise above the nearly 4-week old “unfinished business” does suggest that buyers need a rest… if only to hunker down as quarterly earnings start.

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

Check your email for the Saturday Review link tomorrow morning, which begins at 9:30 ET.

Thursday’s open didn’t gap up above 2442.00, despite having probed fresh highs overnight up to 2446.50. That didn’t prevent the morning from extending higher, but it made it difficult since Wednesday’s buyers had gained no traction. Anyway, a brief probe above Wednesday’s highs up to 2446.00 was reversed down sharply to 2439.00.

Retesting the overnight high intraday didn’t equate to resuming the rally, either. Or later piercing fresh highs.Not when every such probe fails to hold through the relevant timing window. Sound familiar? That behavior at lows is what led to this week’s rally.

2439.00 is an odd level to make a low. Perhaps that’s why its reaction was limited to retracing the overnight high, and holding it. There’s no requirement to retest 2439.00, but I’ll expect it if Friday’s open is not extending higher. Not only 2439.00, but probably 2435.50 if not also lower.

Extending higher is likely to begin by almost literally exploding higher. Whether or not gapping up, the two-day shallowly uptrending channel has been restraining optimism. And it’s in proximity to prior highs at 2451.50 and unfinished business above that at 2454.00. A new high close on a Friday would be bullish longer-term. Not holding an intraday probe of new highs would be bearish.

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

Monitor overnight Globex trading in the chaRTroom here.