I was encouraged when Thursday and Friday held above the recent gap higher, but Globex traders filled it last night. They brought the market almost all the way back this morning, and Globex trading does not count for the most part.
Today will be about whether the market needs to retest the overnight low at 4355.75 or whether we can stay above it, which keeps us in the gap range. I would prefer that we close above 4376.25 which is Friday’s low. Price exploration below 4355.75 opens the door to lower prices and keeps the downtrend intact.
Watch behavior around the open for early clues. Profit-taking for the overnight crowd should be close to complete on their short positions.
Otherwise, nothing has changed in the big picture. New lows would mean that the 18-month cycle is marking down and July 19th was not the completion of the cycle. The initial target would be the 200-day line down around 4180 or so. Continuing higher would bring us to the top of a new trading range likely short of or coincident with the recent all-time highs.
A.F. Thornton