Market Wrap

Tuesday’s open gapped up well above Monday’s 2427.50 highs to 2433.00. A probe up to 2436.00 was retraced during the morning’s bias environment back down to its 2429.25 bias-up signal. It recovered, and each remaining timing window trended up to higher and higher highs.

This pattern would be a “session-long rally” if Monday’s last trending had been down. But Monday’s late action rallied back to session highs. A gap down under Monday afternoon’s 2418.00 lows would have formed a “session-long decline,” and would have begun the process of ending the pullback from Friday morning’s 2443.50 high.

Regardless of the direction, Monday’s range was likely to produce a false breakout. Again, that temporary move down would have helped to form a better base for launching a rally. Instead, rallying first has been sponsored by weak hands, vulnerable to reversing down at any time upon retesting Friday’s high.

Avoiding a reversal down Wednesday morning could extend the rally to 2445.00 if not also to 2553.00. An overnight pullback has room down to 2433.00-2434.00 to maintain the rally’s momentum. Opening any lower could dip back into Monday’s range, where there would be no assurance of not simply extending down to Friday’s lows and lower.

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

Monitor overnight Globex trading in the chaRTroom here.

Don’t confuse narrow ranging with stability. Not that Monday’s range was narrow. But it developed entirely within Friday afternoon’s range, without touching either end of it.

The mood is anxious, with the market afraid to step on its own shadow(s). That often produces a false break in one direction, before reversing more substantially in the opposite direction.

Breaking lower first would help to form a bottom that launches a probe of new highs. Assuming the low’s retest were to hold, which at this point would still be likely — preferably after neutralizing Monday’s “unfinished business below” at 2415.50.

Gapping up Tuesday above Monday’s open and Friday’s close in the 2428.00 area would be credible for extending higher. Otherwise, bouncing first would not be assured of retesting the highs before reversing back down.

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

Monitor overnight Globex trading in the chaRTroom here.

The pattern since Wednesday afternoon had been to probe prior highs and then reverse down. Friday’s pattern was no different structurally, only in degree. Gapping up above the 2436.50 prior high would have broken the pattern and enabled trending higher into the weekend. Only recovering to 2436.50 during the opening 15 minutes of volatility had left the morning’s rally vulnerable to retracing.

Friday morning bias signals tend to persist through the noon hour. The noon hour’s exit had retraced the morning’s rally from 2443.50 only to unchanged at 2430.00. That was the wrong place to be when the bias-up influence disappeared. Support wasn’t helped by NDX already having reversed back to Thursday’s lows. The next lower objective at 2419.25 attracted price down to it, and through it by another 61.8% to 2412.50.

The final hour was entered by a bounce up to 2418.00. Extending higher through the 3:10-3:20 proxy window can’t change whether the bounce’s origin was too low and too late to be sponsored by strong hands. Oversold RSIs at the low require a retest.

Of course, overbought RSIs at the high also require a retest. Presumably that would be done while satisfying the requirement for at least one more new high close. Speaking of which, the rally just failed to exploit the proximity to another new trend high close on a Friday.

Overbought RSIs

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

The link to this weekend’s Saturday Review will be delivered in the morning before its 9:30am ET start.

PROGRAMMING NOTE: The chaRTroom URL has changed. Please be sure to use the link below to access. Check the chaRTroom page for the latest link.

Higher and higher highs don’t make a durable rally. An uptrend, perhaps. But not maintaining a higher high through that timing window’s exit is only distribution. And eventually distribution produces a downtrend.

None of Thursday’s attempts to reinstate Wednesday’s failed Pivot Reversal had been maintained through a timing window’s exit. The two intraday failures each resolved down sharply. Despite bouncing into Thursday’s close, no prior high was recovered.

Distribution. And “unfinished business above” at 2436.00 was neutralized in the process.

More so, sellers gained traction by exiting the bias environment under the noon hour’s low, and then entering the final hour lower. Gapping up above the 2433.75-2436.75 prior highs and extending higher would invalidate the downside traction. Otherwise, the next lower objective in-play is 2419.25.

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

Monitor overnight Globex trading in the chaRTroom here.

Retesting 2426.50 was likely to at least visit 2424.25, which previously had been the room for noise above 2415.00. It was fulfilled by a 5-point plunge during the noon hour from 2429.00. And its test reacted up quickly and aggressively. It also reacted up substantially, almost 10 points to touch the open’s 2433.75 high.

Before this week’s pullback had even begun, during the weekend’s Saturday Review, we discussed the potential down to 2421.50. Its test would have made a more reliable bottom. And still could, but it’s not necessary to resume the rally. No more necessary than was last week’s bottom pullback that stopped short of its 2399.00 potential.

Meanwhile, closing above Wednesday morning’s gap up after probing a fresh trend low intraday would have formed a Pivot Reversal. The setup identifies turning points. All of the setup’s other elements had formed, including actually probing a fresh session high up to 2435.00. But the close was back under he morning’s 2434.50 high. The pattern’s resolution can be as bearish as it could have been bullish.

Wednesday’s late reaction down seemed to suggest as much, retracing a couple of “big, consecutive upbars.” The setup would have triggered a short-squeeze if appearing several minutes earlier. It didn’t, so retracing it isn’t necessarily bearish. Rallying overnight to gap up Thursday can’t be discounted. Otherwise, gapping down Thursday under Wednesday afternoon’s ~2428.00 low could get 2421.50 done, after all.

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

Monitor overnight Globex trading in the chaRTroom here.