Market Wrap (recording & summary)

Monday’s opening sell signal hadn’t finished its business that morning, making it likely to extend into Tuesday morning. Which it did, trending down early overnight and extending lower before the open. Tuesday morning’s low did react up substantially, but mostly only temporarily. The balance of the session ranged choppily sideways through the close, just above the morning’s lows.

A couple of things happened Tuesday, and a couple didn’t.

What did happen is a new sentiment or pattern of gapping up into Friday’s new high session and gapping down into Tuesday’s retracement through that last upleg’s origin. The paradigm shift is sudden and relevant, closing under support — similar to January’s two prior big down days. But what didn’t happen Tuesday is the broken support being within proximity of Wednesday gapping up immediately above it to reject Tuesday’s break. but too far below to be recovered immediately by a gap up tomorrow.

Tuesday’s other development was the multiple downtrending sessions, also a new characteristic. This didn’t happen during January’s rally, which has stretched the rubber band. That rubber band didn’t snap back up in the afternoon, perhaps inhibited by a stream of high-profile post-close earnings due, and/or the evening’s State of the Union address, if not also the next morning’s ADP employment number.

Isolating fresh lows to the overnight is the only reliable recovery pattern that would be signaled immediately. Meanwhile, overnight lower lows not recovered through the open would be vulnerable to melting down into the afternoon.

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