Market Wrap (recording & summary)

Thursday’s “outside day” encompassed all of Wednesday’s range, and all but Tuesday’s first-minute gap up. That gap up had surged through the open. But Thursday’s gap up quickly reversed back into the range, and through it, for a 14-point drop.

So, add that to the list? Thursday’s 14-point post-open drop puts the rest of the list to shame –Tuesday’s 9-point drop from its morning high and 7-point drop through its close, and Wednesday’s 6-point drop after FOMC Minutes. That’s a lot of big, isolated drops within a 9-10 point range, during a brief 3-day window.

Something all of the drops have in common is their retracements. Thursday’s drop was retraced to within 2 points of its post-open origin. That’s larger than any of the prior drops. Their shallower recoveries each soon failed, so Thursday’s incomplete recovery suggests that optimism is healthily restrained. And that’s potentially bullish from a contrarian perspective.

Thursday’s late dip wasn’t productive early enough to be predictive of further selling pressure. It may have only stretched the rubber band to snap back up Friday. Regardless, the burden of proof is on sellers either to gap down substantially Friday or trigger bias-down to avoid probing higher highs.

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

Monitor overnight Globex trading in the chaRTroom here.