Market Wrap

If not for Rosh Hashanah starting at sundown… then Wednesday”s volume would have been heavier, and the market would not be expecting slow volume Thursday. So, the question is whether that would have encouraged more buying, or less?

Pattern Points… (Setups and technicals)
It”s unusual for low-volume environments to trend. It”s already difficult enough to start trending in a low volume environment, and only more difficult to stop it. That was both Wednesday”s challenge and its motivation.

Volume started evaporating ahead of Wednesday evening”s Rosh Hashana holiday. It will remain depressed as worship continues during Thursday.

Low-volume trending is unusual, but it”s likelier Thursday than not. The burden of proof is on no trending, let alone trending back down. That”s from our perspective as of Wednesday”s close. Flat-lining through Thursday”s open would again be unlikely to trend.

Trending is likely to extend overnight or Thursday morning, or both, because Wednesday afternoon buyers gained traction for their efforts. The bias environment was exited above the noon hour, and the final hour was entered higher than both.

There”s room for noise up to 1993.50 above the 1990.50 attraction left outstanding Tuesday. That”s somewhat of an attraction. And there”s still unfinished business above back to last Friday”s 2014.50 pre-open high and 2010.75 gap open.

What”s Next… (Outlook and opportunities)
Negative territory might be probed down to 1987.25 without getting away from the recovery. Unless Thursday”s open were to reject all of Wednesday afternoon”s rally from 1982.50, higher highs remain likely..

If Tuesday’s last-minute slide were strong-handed… then why did it need to wait until the close? It extended lower after the close, too. But that’s not what makes it durable. Maintaining it through Wednesday’s open does.

Pattern points… (Setups and technicals)[pay]
We already knew before Tuesday’s session that positive territory was no-man’s land. At least, for the morning. Monday afternoon’s buyers had failed to absorb the decline’s momentum. So, the post-open test of 1987.50 held.

But that was after holding a test of the 1983.50 bias-down signal. And that put into play a test of the 1990.50 bias-up signal (which became unfinished business above). And that was in positive territory, which was no-man’s land. At least, for the morning.

Apparently, positive territory was off limits for the afternoon, too. The 1977.50 overnight low was retested down to 1975.50 during the afternoon’s no-bias environment. The last hour bounced back up to 1981.00, teasing that the afternoon’s drop could prove to be a very healthy detour.

Good luck with that. That last hour’s bounce failed. Miserably. The 1975.50 low was touched into the cash session close. The next lower support at 1971.50 was touched into the futures close. And 1968.25 was tested coming out of it.

Once again, rallying into positive territory would require gapping up. Gapping up above the bias environment’s 1982.00 high would trigger a “session-long rally” setup. That was only 6 points higher when the cash session closed — doable, but difficult. That’s twice as difficult from 1968.25. But still doable.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s last-minute decline was the product of weak hands, since it originated so late in the day. Extending it down so substantially could be done only when opposition was not around to defend against it. None of which is a buy signal, but a warning to be careful if short or shorting overnight — not resuming the decline Wednesday would likely default to a massive rally.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

If Monday’s drop had dropped any further… then it would be Wednesday’s drop, too. A hold-short would have triggered, likely to extend the decline overnight. It may yet extend overnight. But a leg’s origin can be the most telling clue of its destination.

Pattern points… (Setups and technicals)[pay]
The word “free fall” isn’t appropriate for this pattern. It isn’t even “a” word. But the decline from Thursday’s overnight high has yet to show signs of a bottom.

The decline’s sponsorship has lapsed — WedEX is a signal unto itself, and its influence lapses after Monday morning. Period. Price action since then only ranged flat-to-lower. WedEX sponsorship is gone, and until new sponsorship has replaces it… sort of a free fall.

Support sort of held at “lower prior highs” around 1984.00. It was tested at noon, and at the bias environment’s exit into 2:30, and after the final hour’s entry. The close was above it. But only above it. Reacting back up to close above a prior high would have been bullish for trapping shorts. Not reacting up means that the lows were chipping away at support.

Meanwhile, the only momentum is down. The bias environment’s exit was under the noon hour’s low but wasn’t confirmed at the final hour’s entry. Neither was it rejected. Unless Tuesday’s open were to gap up, fresh lows would be likely.

The next lower attraction at 1977.00 is also the maximum retracement of last week’s rally. Any lower would not be considered a retracement, Any lower would become too far removed from the orbit of Thursday’s overnight high. Despite “unfinished business above,” the next leg would be down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Runaway trending is difficult amid low volume. And volume will thin out Wednesday afternoon ahead of the Jewish New Year worship. That makes Tuesday the last of the best opportunities for a decline to do damage — and maybe the last opportunity altogether to trap shorts.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

If not for the bearish WedEX… then would Thursday night’s high have been retested Friday? Probably not. The indicator’s influence applies much more to Friday afternoon than to Friday morning. But that doesn’t affect its ultimate attraction.

Pattern points… (Setups and technicals)[pay]
Friday’s various influences seemed at different times to be in conflict with each other. But really, it was just the market trying to satisfy as many different interests as possible. Ultimately, it was the WedEX signal that ruled.

Not the 2014.50 “new Globex trend extreme.” The overnight high wasn’t rejected deeply enough at the open to be assured it wouldn’t be retested immediately. In fact, dipping to the 2007.50 bias-up signal was retraced to 2012.75. But its retest is still required intraday.

The overnight high had come within 3 ticks of the morning’s 2015.25 bias-up target. But that was too long before the cash session for its test to have fulfilled buying pressure. Triggering the bias-up signal at 10:15 was invalidated by sliding under 2007.50 through 10:30. The signal left no unfinished business above.

Which brings us to the WedEX, which had triggered “passively bearish.” It’s active Friday afternoon and Monday morning, and can’t take credit for Friday morning’s slide. Being passively bearish, its influence was likelier to absorb bounces than to break support. And it did.

In fact, the morning’s drop extended until the bias environment triggered at 1:20. The bearish WedEX didn’t prevent bouncing into the final hour. But the PASSIVELY bearish WedEX absorbed it. A last-minute plunge retraced precisely 61.8% of the 8-point bounce. Lower lows after the close retraced more.

Having been influential Friday afternoon, WedEX is even likelier to influence Monday morning. Having been modestly influential, it should now be terrifically influential. So, if Monday’s opening 15 minutes of volatility aren’t obviously bearish, then it would be possible that WedEX’s influence has already lapsed.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Be sure to join me at 9:30am ET for the Saturday Strategy Session. I’ll resend the link separately in the morning from the Marketfy site. We’ll review some tips for using the new site, review the market’s bigger picture, and then do instant chart analysis of any stocks or markets that subscribers request. See you there…[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

If the market is satisfying targets as quickly as they’re produced… then that often means longer-term buyers are less involved. Thursday’s market did just that, creating a target in the morning and peaking at it in the afternoon.

Pattern points… (Setups and technicals)[pay]
Thursday morning’s 1999.00 bias-up signal put into play 2005.50. The market promptly triggered no-bias signal, and spent almost the entire afternoon ranging narrowly within a couple of points. Then, as if having forgotten a last-minute detail, the last 30-60 minutes rallied through the close to touch 2005.50.

Exit polling from Scotland is favoring the unsurprising “no” vote winning handily. S&Ps have extended higher to 2009.50. The upper-end of the range for noise above 2005.50 is 2009.25. And 1-minute RSI isn’t returning to overbought, so near-term buying pressure isn’t improving.

Gapping up to fresh trend highs at expiration’s open usually has two choices: Extend the trend or reverse it. Choppy, sideways action is very unlikely. So, the passively bearish WedEX would influence the entire session negatively if the morning declines.

Notice that buyers gained no traction at Thursday’s close. The bias environment’s exit and final hour’s entry were within the noon hour’s range. Yet price extended higher. Extending through the 2005.50 target would have put into play higher targets. Closing at 2005.50 did not. Yet price is trying to extend higher anyway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Accident waiting to happen? Not if Friday’s opening action inverts the otherwise bearish WedEX. Then the rally is entering blow-off mode. Absent that plot twist, the only twist is back down… Housekeeping notes: Thursday afternoon’s Market Wrap recording came in without delay, so I don’t know what has delayed the morning’s recording… Did you try your Marketfy login? Please let me know ASAP if you have any difficulty. I’ll be publishing to both sites into next week[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.