Market Wrap

Thursday afternoon wasn’t really paralyzed by anxiousness ahead of Friday’s Employment Situation report. But its trending attempts got nowhere. The noon hour exit rallied through the morning’s 2354.00 high up to 2361.25. That was reversed down under 2350.00, where the balance of the session consolidated back up to 2354.00.

A wide range, but no net. The afternoon’s 2364.50 bias-up target became “unfinished business above.” It might stay that way for awhile. There was no bullish reason for Thursday afternoon’s probe of fresh highs to be retraced back under 2350.50.

The door is open to retesting Thursday morning’s low down to 2344.75 or lower. Lower could be difficult to recover, but easier to roll over the ledge to much lower targets. Recovering above 2357.50 and extending higher without delay would avoid that ledge.

Rallying sufficiently at Friday’s open

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Wednesday afternoon’s reaction down from the morning’s rally to 2375.00 was deeper than necessary. It managed to trigger a sell signal and then touch its 2365.00 target. Having satisfied sellers, a complete recovery was likely, if not a fresh high. But the complete recovery still stopped 1 tick short of the high. Overbought RSIs were left outstanding.

Reaction to the FOMC Minutes was only briefly pessimistic. Initially. Then eventually very bearish as the reaction down cascaded sharply lower. Plunge is more apt. Sellers gained traction through the final hour entry and proxy window both probing their prior timing window lows. Tuesday morning’s 2346.50 low was probed.

There is still some potential for recovery. the probe under Tuesday morning’s low held a test of its “unfinished business below” at 2344.75. And Wednesday’s late structure allows gapping up to and through 2357.50 to reverse momentum up, even if only for the near-term.

But the drop’s traction does suggest probing lower anyway. And testing 2369.00 intraday without closing above it makes its reaction vulnerable to probing last week’s lows down to 2311.00. That would be another fresh low off of another lower high — make or break between recovering to new highs, or rolling over the edge.

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Efforts to invalidate Tuesday morning’s 2349.75 bias-down signal didn’t fail for lack of proximity. The 10:30, 11:30 and noon bars each overlapped the relevant bounce limit. And each limit was successively higher. But overlapping disqualifies the attempt. So, the 2344.75 bias-down target becomes “unfinished business below.”

The required test of 2344.75 could be delayed by another rally leg. Last week’s no-bias trending above 2342.25 wasn’t retraced until after having extended higher for several days. That said, extending much higher from current levels would all but ensure probing new highs. Tuesday’s late surge up to 2358.50 came too late to qualify.

Aggressive behavior is necessary at this stage of the pattern to ignore the attraction below. More than optimal, gapping up Wednesday may be the minimal requirement for resuming the rally. Although an overnight dip to 2344.75 would qualify to neutralize the attraction below, not recovering it overnight would risk resuming the decline.

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Monday morning’s break under its Pivotal Uptrending Support at 2358.50 was very productive. A bias-down target was created and met at 2350.50. And last week’s no-bias trending was retraced back to its 2342.25 origin. Even lower prior highs were tested down to 2340.00. (Last week I had forecast 2339.75).

Even 2321.00 and 2111.00 would be in-play if not for one thing — Monday’s close was back above the pivotal uptrend’s 2348.75 connector. That was Wednesday’s pullback low, which defined the plane extending from the prior Wednesday’s pivotal low. connector. Downside momentum attracted no new sponsorship. The question is whether the decline will attract delayed sponsorship at Tuesday’s open.

The afternoon recovery up to 2356.00 gained traction (by entering the final hour above the bias environment high, and then probing fresh highs through the proxy window) so sellers can retake control Tuesday by gapping down. And having trended up into Monday’s close, gapping down Tuesday under Monday afternoon’s 2345.50 lows could form a session-long decline setup. Otherwise, recovering 2366.25 would signal the recovery was extending. Extending to new highs would be all but assured.

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The week began with a bang, and ended with a whimper. Gapping down to fresh pullback lows Monday, and probing lower intraday, had tested two critical levels. Both 2327.00 and 2317.00 held their test (the latter to within 3 ticks) before reversing to close back above 2331.00. The pullback had ended. That much we knew instantly.

Instantly extending Monday’s intraday recovery into a multi-session rally was not assured. And it developed despite bearish influences and attractions left outstanding below. Monday’s 2321.00 gap down will want to be filled eventually. Tuesday morning’s 2342.25 bias-up signal requires an eventual retest.

But Friday’s session hardly suggested an association with such volatility that recently preceded it. Thursday night’s slide was being reversed before the open, and then more so into the afternoon. All action developed at or between its bias signals. The afternoon bias environment’s drop was not credible for extending down for its no-bias timing, so it recovered. Temporarily, as a deeper drop into the close retested the open’s low, but held the range.

That was the week. Friday’s session may have been the week’s hallowest, if not also for the month. Now we have one week before end-o’quarter earnings start buffeting the opens, and inhibiting the closes. Price action during its last month struggled, suggesting that analysts weren’t awed upon checking in with their coverage. In fact, this past couple of week’s has already seen misses appearing. Example, Lululemon Athletica (LULU) plunging Thursday as its stores apparently have seen too few misses arriving. A week of similar higher-profile earnings news probably won’t attract stock buyers. Anticipation for that week can’t be very attractive, either.

But Friday’s whimper is obvious even without being juxtaposed against Monday’s bang. It was essentially an “inside day” and it is positioned at a multi-session recovery’s extreme. Presumably, there is still an objective or two outstanding above, else the conditions and attractions below would have produced a downside bang into the weekend. The question is in what order we’re about to see one more weak-handed optimistic surge ahead of earnings, and another defensive reaction down/

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

REPEATING: There is NO Saturday Review this weekend. Overnight Globex trading can be monitored Sunday night in the chaRTroom here.