Market Wrap

If this is a holiday weekend… then there is no Saturday Strategy Session. We did discuss bigger picture items during Friday’s post-close Market Wrap, whose recording is linked from the blog’s sidebar.

Pattern points… (Setups and technicals)[pay]
New high closes on Fridays tend not to be a trend’s extreme. There is rare exception to that historically, and no exception when that trend extreme appears ahead of a holiday weekend. At least one more higher close is likely.

That doesn’t prevent an interim dip. In fact, closing under the prior intraday high does undermine upside momentum. It wasn’t for a lack of opportunity, since the prior high was probed intraday.

So, Friday’s new high close wasn’t so much a breakout as it was just noise in the range. And the bigger picture is disturbing since the failed Ascending Triangle’s high is being retested without sufficient refueling. Higher highs are a high probability, and so is there rejection.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Chartroom will be open Sunday night for Globex, which trades into Monday. I’ll comment if anything merits it. Meanwhile, have a safe and happy Memorial Day weekend! [/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 sellers wanted to reject Thursday’s buyers… then they could have done better than limiting the late high to a single errant tick. Relevant support was hardly any lower through the afternoon, but the market only consolidated.

Pattern points… (Setups and technicals)[pay]
Buyers gained traction Thursday. Barely, but they did. The bias environment was exited just above the noon hour’s high. And thanks to an errant tick, the final hour was entered above the bias environment high. Neither was optimal, but neither was rejected on a timely basis.

The 3:10-3:20 timing window could have invalidated the traction. Price had already dipped. But the window didn’t trend down, certainly not under any relevant level.

Thursday did close back under the noon hour’s low. That undermines the upside momentum. It has nothing to do with upside attractions that remain outstanding — last Tuesday’s high, the high. Between those mixed signals, and the impending holiday weekend sucking volume out of the room, there is little predictability at this moment for Friday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Buyers gained traction, so trending down immediately requires gapping down. I don’t suggest stepping in to buy a dip without some indication it’s done. By the same token, fresh highs can extend toward, to and through unfinished business above.[/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 Wednesday’s open hadn’t surged… then would the afternoon have attacked last week’s highs? Maybe only the consolidation that had followed the highs, but a pretty productive rally anyway. So, did Wednesday afternoon hesitate due to strong-handed patience, or is there an attraction below that must be visited?

Pattern points… (Setups and technicals)[pay]
Wednesday afternoon’s buyers gained traction. The final hour was entered just above the bias environment’s high (the high prior to the FOMC reaction’s surge to 1885.00). And the 3:10-3:20 timing window trended up to fresh highs.

But it seems a little repressed that the afternoon’s high was only 3 points above the morning’s high. Perhaps the morning’s surge used up too much buying pressure. Closing higher, nonetheless, still reflects strength.

With the afternoon’s 1887.50 bias-up target outstanding, and buyers gaining traction, a hold-long would not have been inappropriate. But the repressed afternoon strength raised the concern for an overnight refueling dip. Regardless, extending higher would target new highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
With or without a refueling dip, extending the rally Thursday should somewhat duplicate Wednesday’s open above 1874.00-1875.00 which extended higher aggressively. A shallow opening dip would still likely recover. Perhaps the only path down is to gap under Wednesday afternoon’s 1879.00 low — having trended up into the close, that would trigger a session-long decline setup.[/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 Tuesday’s open didn’t gap up… then a retest of last Thursday’s lows would be likely. The open was 6 points short of its gap up requirement. The afternoon’s low was 6 points short of retesting last week’s low. Underachiever, at both ends.

Pattern points… (Setups and technicals)[pay]
Closing under 1874.00-1875.00 essentially proves another rally leg won’t develop prior to last week’s low. That was an option Tuesday morning, had its test launched a rally then. An afternoon short-squeeze could have reinstated its potential. But Tuesday afternoon’s bounce after the bias environment exit and final hour entry reflect weak-handed buyers.

Dipping back down into the close could have reinstated the decline by triggering a hold-short. But the 1868.50 trigger wasn’t even touched until at the close, and then it only held. So, gapping down anyway would be likely to rally back into positive territory through the open, instead of extending down.

Bounces should hold any test of 1874.00-1875.00 to be only corrective on the way to testing Thursday’s low. Gapping up Wednesday above 1874.00-1875.00 or opening above it could negate the drop’s near-term momentum, perhaps even reinstate the high’s retest. Otherwise, 1859.00 and presumably 1854.00 are in-play.

[/pay]What’s Next… (Outlook and opportunities)[pay]
“Wreversal Wednesday” got its name for being prone to reverse initial trending into a completely opposite direction. This irrelevant to the preceding trend, so trending either up or down would be vulnerable to reversing more substantially in the opposite direction.[/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 expiration’s influence is the only bullish influence… then what held price aloft through Monday afternoon? WedEX didn’t trigger on time to be reliably predictive. And now its 1885.00 un-triggered signal is being attacked. The market seems intent upon retesting it, but can it be exceeded?

Pattern points… (Setups and technicals)[pay]
A retest of last week’s 1898.50 highs could be fulfilled within days, if not within hours. Monday’s ~1882.00 close isn’t that close, but neither is it that far away. Just one requirement: the recovery from Thursday’s 1859.00 low can’t afford to hesitate.

Monday’s 1883.00 high is a 61.8% retracement of the 1898.50-1859.00 sell-off. That could retrace to 1874.00-1875.00 without yet reversing momentum down. However, recall that in this weekend’s Saturday Strategy Session I this particular leg the “Satchel Paige setup,” because it can’t afford to look back and see what might be gaining on it. Taking time to patiently back-and-fill would more be more vulnerable to extending back to Thursday’s low.

Monday afternoon’s buyers gained no traction for their efforts, despite firming and closing at session highs. The bias environment’s exit and final hour’s entry both were within the noon hour’s range. Fresh highs weren’t probed until the last half-hour. So, avoiding a corrective dip the next morning and extending higher without delay requires gapping up. And maintaining the gap up.

[/pay]What’s Next… (Outlook and opportunities)[pay]
So, extending higher to retest 1898.50 (presumably up to 1902-1907.00) without a corrective dip must maintain a gap up. But a corrective dip to 1874.00-1875.00 would be vulnerable to retracing all of the recovery from Thursday’s 1859.00 low. Monday’s 1882.00 close isn’t necessarily “between” between a rock and a hard place, but it is equidistant from each. [/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.