Market Wrap (recording & summary)

Monday afternoon’s 2774.00 bias-up target was probed by nearly 2 points before the the bias environment began lapsing. Its reaction down tested a sell signal down to 2669.50 but never triggered it before bouncing back to 2774.00 as the bias environment lapsed. Its bounce extended higher to trigger yet another upleg that tested 2780.00. Then rinse and repeat: Another reaction down held 2774.00 before another upleg surged to 2785.00 through the cash session close.

That’s pretty optimistic for being just hours away from the new Fed chair’s first congressional testimony. If the market hears what it wants on Tuesday, then a repeat of Monday’s rally could easily fulfill the 2813.00 and 2825.25-2827.75 targets.

Regardless, mind the analog to the 1987-style crash template. Its price pattern is busted, but its timing is relatively intact. Tue-Wed is the timing for its last bounce to peak, which may be a metaphor for “rounding third base.” Also note that the template identifies an inflection point, which in 1987 inflected down sharply. The same template could still be fulfilled by reversing down sharply, but not as substantially. The inflection point can also steepen the rally’s slope instead of reversing it.

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