Market Wrap (recording & summary)

The answer to everyone’s question is 2763. That’s what caused Tuesday’s drop. At least, that’s what turned whatever had triggered it into something far more substantial.

That’s ES 2763.00, from Tuesday’s First Trade: “Lower lows have potential to 2763.00, but probably no lower before bouncing to keep alive the rally’s momentum. Any deeper would overlap Friday’s cash session ‘lower prior highs’ when optimism needs to remain intact.“

Monday’s gap up had already held its retest of Friday’s range — a 61.8% retracement between Friday’s close and Monday’s low, which had produced the gap. The pullback could be retested, but not Friday’s range without rejecting the gap’s intent. I had said that sponsorship to get there was unlikely ahead of Wednesday’s illiquidity, to which Trump said, “Hold my beer” and sent his “tariff man” tweet.

As difficult as it would be to generate sponsorship in a less liquid environment, it would be difficult to stop it. The consequence exacerbated the pullback. It could have been shallower, and it could still be deeper. Tuesday’s low held a 61.8% retracement of the post-Thanksgiving rally 2629.00 up to Sunday night’s  2814.00 Globex high. Recovering from here would be more bullish than first extending down to the room for noise at 2656.00, but possible.

One potentially bullish factor to having so many headlines of different stories accompanying the plunge is that a lot of scapegoats can be discounted at once. Brexit drama, Yield curve inversion, China trade truce doubts… Each was already suspicious, and not a total surprise. And the break they induced under 2763.00 was exacerbated by Wednesday’s illiquidity

Also retraced was 61.8% of Fed Chair Powell’s speech surge last Wednesday, represented at Tuesday’s close. “Lower prior highs” from that morning were also tested. Tuesday night’s price action only firmed, not yet enough to suggest any particular resolution. I’ll add comments in the chaRTroom overnight.

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