Market Wrap

If not for the session”s sloooow volume… then probing new highs would be very bullish. Not that price can”t extend higher near-term. But normal volume might have prevented new highs altogether.

Pattern points… (Setups and technicals)
New trend highs on Fridays aren”t often reversed intraday. Friday held up high enough and long enough to make a downdraft unlikely. That didn”t prevent dropping 5 points through the close to 2083.00. But the timing did make a downdraft irrelevant.

Despite “the path of least resistance” being up, Friday”s bias environment high was held through the close. Resistance at 2088.00 had been probed already by 3 ticks before the last 60-90 minutes got underway. Buyers would gain no traction without closing above 2088.00 after having tested it intraday.

Despite potential for drifting higher up to 2093.00, the last 60-90 minutes took an alternate route. With room for noise down to 2085.50, a late 5 point plunge slid through it to 2083.00. But it gained no traction, since the noon hour”s prior low was overlapped by every bar that probed under it.

And now the rally has a second session spent exclusively above all prior intraday ranges. Late plunge notwithstanding, Friday”s session did probe higher highs intraday instead of reacting down from the open like Tuesday. But neither session”s buyers gained traction, leaving the rally”s momentum vulnerable to reversing down from here.

What”s Next… (Outlook and opportunities)
Reminder: There”s no Saturday Review during holidays. Be sure to ask during trading hour for any stock chart analysis — especially this last week of the year if making tax decisions.

If Wednesday were a normal day… then Tuesday”s setup would have resolved differently. But if it were a normal day, then would Tuesday”s setup have developed, at all?

Pattern points… (Setups and technicals)
Wednesday”s open didn”t trigger a sell signal. So, Tuesday”s bearish setup retained its potential. That potential could have inverted on a normal day. Indeed, Tuesday”s highs were probed by 1 point up to 2083.50.

Assuming that the bearish potential had not inverted up all day, then a normal day also would have allowed the setup”s sell signal to trigger in the afternoon. Wednesday”s holiday-shortened session didn”t have an afternoon. But the noon hour did slide 6-1/2 points to a fresh session low.

The late plunge didn”t  extend down. So, Wednesday closed within the prior session”s range, and within range of Tuesday”s pre-open “new Globex trend extreme.” It requires being retested intraday. Eventually. Wednesday”s high stopped 1 point short of it.

Quickly triggering a sell signal Friday would be more credible for trending down intraday since the hours are normal. But a weekend”s illiquidity is still impending. And this is still a very low volume environment.

What”s Next… (Outlook and opportunities)
Globex re-opens normally at 6pm ET Christmas Day. The chartroom will re-open then. Meanwhile, best wishes to all for a very happy holiday and joyous Christmas.

If Tuesday”s gap up weren”t so high… then its reaction down could have limited the session”s range to overlapping prior highs. Instead, the session ranged almost exclusively above all prior intraday highs, which is optimism. And it didn”t trend higher, which is ineffectual optimism.

Pattern points… (Setups and technicals)
A potentially bearish setup formed Tuesday by gapping up to new highs, and then essentially ranging exclusively above all prior intraday highs — for the first time in the rally. No unfinished business was left outstanding above, since the gap”s opening print was neutralized after touching a prior session”s high.

Emphasis should be placed on the word “setup.” This is not yet a signal, which would be triggered through Wednesday”s opening 15 minutes of volatility. A normal length session would be able to trigger in the afternoon following a failed morning probe of fresh highs. But that”s not an option for Wednesday”s holiday shortened session.

There is no higher target in-play, and hasn”t been, other than to retest prior highs. That was already fulfilled without putting into play a higher target, beginning a process of distribution.

Those same holiday-shortened hours that limit the paths down may save the day by inhibiting sponsorship from driving price lower. Having said that, sponsorship isn”t necessary to begin a correction.

What”s Next… (Outlook and opportunities)
Regardless of the setup or the trigger, Wednesday”s early close (and Thursday”s close) have already begun inhibiting participation. Be careful not to force trades. Consider exiting more often into an objective”s test, and being less tolerant of a pullback limit or bounce limit test.

If Monday”s upside target were met earlier… then there would have been time to reverse down far enough for Tuesday”s sellers to immediate take control. But waiting until the last minute before neutralizing the upside attraction makes some higher high Tuesday likely first.

Pattern points… (Setups and technicals)
That tends to be a reliable attraction. As much as was WedEX”s influence on Monday morning. While sellers were marginalized, the upward bias only absorbed dips. There was no trending, let alone fresh highs. 

Not Monday morning. However, Monday afternoon”s bias environment did print a fresh session high, but it was only noise while ranging around its 2073.00 bias-up signal. 

The rally gained no traction for its effort Monday, since exiting the bias environment above the noon hour”s high wasn”t matched by the final hour”s entry. Probing new session highs anyway only wasted buying pressure and reflected impatient weak-handed buyers. 

More so, it neutralized the morning”s 2075.75 bias-up target which had become “unfinished business above.” Its attraction is neutralized.

Only Monday”s last-minute high touched the overnight high, but both highs stopped short of touching Friday afternoon”s high. I don”t consider that to be pessimism when comparing against an expiration extreme. But it still suggests that sellers are being eerily patient.

What”s Next… (Outlook and opportunities)
Wednesday”s session is abbreviated by three hours, so Tuesday is unlikely to initiate any new trending. At least, extending into new high territory will be more difficult than retracing recently acquired ground. In either case, trending into falling volume is likely to be retraced entirely.

If not for expiration… then Thursday”s last-hour surge probably wouldn”t have happened. Having happened, and having extended higher, expiration probably muted the late reaction down.

Pattern points… (Setups and technicals)
Wednesday”s Expiration indicator (WedEX) triggered  bullish. That was primarily due to Wednesday”s session not extending the recent downtrend. Unless inverted, Friday afternoon and Monday morning were destined to be biased upward.

Actually triggering bias-up Friday morning prevented WedEX from inverting, although the balance of the morning only ranged sideways after testing the 2065.25 bias-up target. The afternoon did trend higher — the bias environment was exited above the noon hour”s high and the final hour was entered higher. 

Extending up to a new high at 2076.25 peaked into the position-squaring window and reversed down sharply to 2065.25. Post-close action has extended down to within 1 tick of the reversal”s 2062.75 target, at uptrending support that formed during the noon hour.

Now the bullish WedEX can resume its influence Monday morning. CAVEAT: There is no assurance the opening tick won”t gap down significantly, but post-open action should trend up into the noon hour.

What”s Next… (Outlook and opportunities)
New highs were probed so quickly from the recent low. New sponsorship never built integrity that can be relied upon to defend a reaction down after Monday morning. And that assumes Monday morning bounces from the open, which could entice even more sellers. But this being a holiday-abbreviated week, with an early close Wednesday, not reversing down Monday could avoid reversing down through Christmas.