Market Wrap (recording & summary)

Optimism ahead of the new Fed Chair’s first ever congressional testimony proved to have been discounted already. Monday and Tuesday’s sessions bookend-ed each other, one trending up and the other trending down. They even shared similar characteristics:

Monday’s 2759.50 open was reversed temporarily by the first hour’s dip back down to 2753.00 before rallying sharply to 2795.00 through its close. Tuesday’s 2782.00 open was reversed temporarily by the first hour’s surge up to 2790.00 before sliding sharply to 2743.00 through its close. Both sessions even tried to trigger a very late and unreliable reversal signal, only to extend the intraday trend.

Inverse characteristics are also similar characteristics. If both sessions are influenced by the same sponsorship, then Tuesday’s trending attempt won’t extend the next day, either. Which would make Wednesday more likely to range — albeit a wide range, but without a directional resolution.

How will we know, as early as possible? Since 2743.00 was the next “lower prior high” and its test held, opening Wednesday back above 2753.25 and 2757.00 would be increasingly likely to have absorbed Tuesday’s drop. Back above 2766.00 and 2771.50 would help to confirm. An attack on Monday-Tuesday highs wouldn’t be required, but likely. Otherwise, not already recovering through the open would be vulnerable to extending Tuesday’s drop sharply and deeply, potentially fulfilling the 1987-crash style template.

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