Market Wrap (recording & summary)

Tuesday afternoon’s 2662.00 bias-down signal didn’t trigger, but it broke sharply lower when the bias environment began lapsing. Its 2655.00 bias-down target was probed by 3 points. More important, the fresh lows joined the morning and noon hour’s fresh lows to extend Monday afternoon’s slide. Its trend reversal is now confirmed, regardless of closing nearly unchanged on the day.

Meanwhile, the market has adopted a new and an interesting characteristic — defensive posturing. Based on Tuesday morning’s price action, we anticipated the President’s afternoon remarks would be greeted from fresh session lows. Later, Iran’s response was preceded by a plunge to more fresh session lows. Their recoveries are masking the 180-degree change from greeting news overly-optimistically, and then recovering from reactions down.

The market is at once learning both to posture defensively by dipping, and also to prepare for buying the dip. This eventually encounters a problem, as dips become too shallow and bounces are sponsored by weak hands. It becomes a vicious circle that ends with a bigger downleg, or resets with bigger corrective bounce.

Perhaps Monday afternoon’s 19-point slide was the beginning of defensive posturing. Tuesday included a couple of 16-point downlegs ahead of news. Gapping up Wednesday above Tuesday’s 2674.00 high could retest Monday’s highs up to 2684.25 and still resolve down into the weekend. There are two near-term paths down, one extending down through Thursday morning, and the other bouncing first before launching a deeper downleg into the weekend. Extending down without delay Wednesday could find a near-term low and a temporary bounce Thursday morning.

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