Market Wrap

If Friday’s pre-open spike up had not happened… then the post-open surge would have gained sponsorship to extend higher through the noon hour. And through prior highs. But the pre-open spike created cover to absorb the later effort. The post-open effort also neutralized the pre-open spike’s resistance. Now it’s up to Monday to try again.

Pattern points… (Setups and technicals)[pay]
Friday’s reaction to the Employment Situation report was spectacular. And it was spectacular brief. The pre-open reaction spiked up and then reversed back down. The post-open action retraced almost all of the spike, and then more than just its reversal down.

The bias environment was exited under the noon hour’s low. And although the final hour’s entry was still within the bias environment’s range, the 3:10-3:20 window did trend down through a Pivotal Uptrending support of session lows.

That qualifies as gaining traction, despite not producing a fresh low. However, being a Friday, unproductive traction is difficult to exploit Monday after the weekend has softened memories.

Not that a downdraft isn’t possible — it’s likely, if Monday’s open isn’t already rallying. And similar to Friday’s scenario of any rally being a big rally, rallying at all Monday should begin by gapping up above Friday afternoon’s highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Saturday strategy session [/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 FOMC reaction was only brief and muted… then can the Employment Situation report be any more productive? After all, FOMC news has become as influential to price action, if not more so. But this week’s 2-3 knee-jerk reactions were still being overlapped Thursday.

Pattern points… (Setups and technicals)[pay]
I’m labeling Thursday’s session “ineffectual pessimism” for only briefly probing a fresh high, and for dipping temporarily to the range’s lower-end. Not that buyers got much for their own efforts, but they did get something. That’s because despite there being no requirement to probe fresh highs, fresh highs were probed anyway. That qualifies as chipping away at resistance.

Ineffectual pessimism ahead of Friday’s Employment Situation report suggests there is still a “wall of worry” to climb before a downtrend can begin. Chipping away at resistance helps to climb that wall.

New highs are still about 8-10 points away, and I would expect any rally to attack them. Then the questions would be about whether the close was a new high, whether prior intraday highs were probed intraday, and whether the new high close was above prior intraday highs — all of which would speak to whether the rally had entrenched itself further.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There tends not to be much volatility or trending the night before a monthly Employment Situation report.[/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 Dow’s new high close is any indication… then S&Ps shouldn’t be far behind. Can NDX make it, too?

Pattern points… (Setups and technicals)[pay]
Wednesday’s last hour ranged widely, and choppily, at and around session highs. It had become unlikely to anything different.

The bias environment had been exited above the noon hour’s high and the final hour was entered above the bias environment highs. That’s buyers gaining traction. The 3:10-3:20 timing window dropped, undermining momentum, but it was too late to reverse the trend down.

That didn’t prevent a hold-long setup from triggering. Barely recovering 1876.50 triggered it. Probing above 1878.00 made it more compelling. Ticking post-close to fresh highs at 1880.25 seem to confirm it.

Meanwhile, the Dow made a new high close by about 10 points, albeit without even touching prior intraday highs. S&Ps should follow them, and it’s still possible for NDX to come along, too. Sellers aren’t totally harmless — gapping down back under Wednesday afternoon’s 1870.50 low would trigger a “session-long decline” setup.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Earnings, econ reports, the FOMC… and now the BOE and ECB will influence Currencies before Thursday’s open. Volatility should persist.[/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 stocks fall from Tuesday afternoon’s narrow range… then will they make a sound? Monday’s wild choppiness had already made the market vulnerable to pulling in its reigns to rest. Tuesday morning’s choppiness almost required it.

Pattern points… (Setups and technicals)[pay]
Wild choppiness can be predictive in expecting its “shock to the system” to paralyze price action. Monday’s was an exception, because its highs had been “ineffectually pessimistic,” suggesting some delayed upside follow-through.

Tuesday morning’s upside follow-through also stopped pessimistically short in a couple of significant spots. So, some more upside follow-through Wednesday morning, perhaps?

Unlike Monday’s close, Tuesday afternoon didn’t bequeath any upside momentum to Wednesday’s open. Pre-open high-profile news like ADP and other earnings could lift the inhibition. A pullback first wouldn’t be surprising either, as defensive posturing ahead of the afternoon’s FOMC announcement.

That’s the problem with a narrow ranging afternoon — little about it is predictive.

[/pay]What’s Next… (Outlook and opportunities)[pay]
ADP’s jobs report sort of kicks off the three-day focus on Friday’s Employment Situation report. Its validity is controversial, but its influence on price action is reliable. Any trending should run its course early, as anxiousness ahead of the afternoon’s FOMC decision often paralyzes volatility by late-morning.[/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 morning’s rally proved Friday’s sellers were weak hands… then what did Monday afternoon’s rally prove? It did, and it didn’t. Reversing down sharply intraday didn’t prevent retracing almost all the way back up to the morning’s highs. And almost all the way back up to Friday’s highs. The operative word is “almost.” That suggests pessimism, which doesn’t prove anything… yet.

Pattern points… (Setups and technicals)[pay]
Monday’s wide-ranging choppiness reflects very divergent opinion. That’s quite a way to start a very newsy week. And it’s not just noise within a range. Monday’s session probed prior highs and prior lows.

If only it had settled beyond either.

My concern going forward near-term is that Monday’s volatility was a “shock to the system.” Doctor’s orders would require ranging narrowly through Tuesday and into Wednesday morning. Usually that’s in reaction to a major event, I suspect that’s not the case here.

Also, several instances of ineffectual pessimism suggest another rally effort, anyway. The open’s attack on Friday’s high, the morning’s peak stopping pessimistically short of filling the gap back to Thursday’s close, and the afternoon’s recovery stopping short again of fresh highs. Each a different form of pessimism, each ineffectual.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Resuming the decline is also possible. But Monday’s buyers gained traction for their efforts, so an opening dip has room to 1860.00-1861.00 before another downleg is underway. Anything shallower, or just trading higher, could rally sharply intraday.[/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.