Coming into the open session Monday the market had already made a big move to the downside.

Both the Nasdaq futures and S&P 500 futures were trading negative after making an aggressive move overnight. This move was a continuation of the Friday cash session. Price action could still be attributed to the market digesting the speech that Federal Reserve (Fed) Chairman Jerome Powell gave at the Jackson Hole, Wyo, symposium  on Friday.

‘Cover pop’ exposes selling volume

At the opening bell for this week, there was a cover pop, as expected. Cover pops happen when there has been a strong volume of selling and exhaustion appears. This allows the bulls to temporarily move the market to the upside. The cover pop lasted for the first hour before finally being neutralized by the selling pressure of the bears.

After the cover pop there was a slight consolidation period where the bulls and bears battled it out. The bears ultimately won the battle bringing the market back down to its opening level. The selling pressure then became strong enough to bring the market to new lows on the session. TBears from this point on were not able to make new lows again on the day.

The selling pressure had run dry by mid-morning. Between the overnight drop and early morning selling the bears had exhausted their strength. The bulls mounted a charge. Buying pressure from the bulls was strong enough to move the market higher, but not strong enough to make a huge impact on the macro results. In the micro, the bulls were eventually able to regain all of the overnight and cash session losses. That is where they ran into strong resistance. 

Power hour, or the last hour of the cash session, began with volatile and violent price action. The moves overall were non-directional in the macro, but the micro movement was all over the place. The resistance from earlier in the session had remained strong, not allowing the bulls to break through.

Rough day ends with bears in control

The bulls put in a good base causing the S&P 500 and Nasdaq to trade in a tight range. The movement was a rough ride for traders. The bears eventually won as the close neared. One last strong sell-off into the close allowed the bears to regain and keep control of the session.
Both the Nasdaq and the S&P 500 futures were negative to close the day. The S&P 500 futures closed down .72%, losing 28.75 points, while the Nasdaq futures closed down 1.09%, a loss of 137 points. The Dow was down 174 points, losing .54%.