Market Wrap

If the past two sessions are any indication of expiration… then we could be in for a wild ride Friday. Or, not. Often, extreme volatility before expiration finds everyone positioned satisfactorily into opening rotation. The key is the opening action…

Pattern points… (Setups and technicals)[pay]
Oversold RSIs from Wednesday afternoon’s 1842.00 low remain outstanding after Thursday’s rally up to 1866.00. Why bother to mention that? After all, that’s quite a ways below, not to mention being in the opposite direction. It’s still relevant because Thursday’s rally didn’t leave the oversold RSIs’ orbit.

Wednesday’s prior high, whose reaction down produced the 1842.00 oversold RSIs, was only retraced, and not exceeded. Breaking back under a prior low like 1857.50 or 1855.00 would make the low’s attraction much stronger, likely to be tested down to 1839.00.

The attraction below becomes somewhat moot by extending above 1868.25. It’s not a session-long rally trigger, but it’s back within a prior range whose re-entry would suggest re-entering the next higher range, and so on. The domino effect would lead to retesting the Employment Situation report’s 1880.00 high.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This being a Friday, the morning’s bias tends to persist through the noon hour. This being expiration, trending through the first 15 minutes of volatility would be likely to trend throughout the day.[/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 Fed wanted to trigger a downleg Wednesday… then they failed. Sure, the FOMC policy statement triggered a 25-point drop. But from one of the range to the other, easily holding a test of Monday’s mid-day low. Maybe durable follow-through is coming, but Wednesday wasn’t it.

Pattern points… (Setups and technicals)[pay]
The first drop in reaction to FOMC bottomed at 1855.00 support. Its reaction up eventually formed a Symmetrical Triangle (circled red). Breakouts in one direction tend to reverse back into and through the pattern more substantially in the opposite direction. Meanwhile, the pattern’s “key low” (circled green) is normally retested regardless of the ultimate resolution.

Wednesday’s bounce leaves one of two opens for Thursday. One choice is to gap up above the triangle and extend through Wednesday’s highs. The other choice involves oversold RSIs at the low which require a retest. That doesn’t prevent extending more substantially through the opposite end of the pattern first. It doesn’t prevent retesting the low from recovering.

By the same token, the triangle doesn’t prevent the low’s retest from simply extending — to Sunday night’s low, and through it. But if its retest were not limited only to overnight, then a significant downleg would be underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
WedEX wasn’t bullish. It won’t be, not without closing above a prior high. It could be passively bullish by holding a test of a relevant low. Wednesday’s close was still testing a relevant low at 1855.00. Wednesday’s low held a test of Tuesday’s relevant low at 1846.00, so its immediate break isn’t likely. Thursday’s open should bring more clarity to the indicator’s bias into and out of the 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 Yellen wants goose Wednesday’s market… then she’ll announce that Rubles are replacing Dollars. Placating Putin seems to be more effective than QE, or at least a good tapering offset. And they’re both doves, apparently, They don’t see entirely eye-to-eye — one is consolidating…

Pattern points… (Setups and technicals)[pay]
Two consecutive overnight rallies have trended into the open. Despite holding those gains, neither extended any higher past the open, and the afternoon’s buyers gained no traction for their efforts.

This sequence can repeat indefinitely, but that’s unlikely. When the music of this pattern does stop, the market usually seems surprised to find how high it has traveled. And it suddenly remembers it is afraid of heights.

Unlike Monday, Tuesday left no unfinished business outstanding above. And it left a gap to the prior session’s close outstanding below. Anxiousness ahead of Wedenesday afternoon’s FOMC news is likely to paralyze price action before the announcement. Then Yellen’s first-ever quarterly Q&A will keep things active into the close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
WedEX has an opportunity to trigger at Wednesday’s close. The session is likely to be choppy, which might make Thursday’s open the final arbiter. But trending only overnight is probably a thing of the past. [/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 open was a relief rally… then that was some relief. But that was all the relief there was, since the open’s peak didn’t improve intraday. This market isn’t out of the woods. Actually, perhaps all it did Monday was to climb further up a tree, with a bear close behind.

Pattern points… (Setups and technicals)[pay]
Monday’s session-long rally bucked several trends. From triggering at all on a Monday, to not probing a fresh high in the final hour. But it did marginalize sellers, who never retook control, and not for lack of trying. Anyway, extending throughout the day tends to extend the following day. Monday didn’t extend, so Tuesday might not either.

Monday’s buyers gained no traction — the final hour wasn’t entered above the bias environment high, which wasn’t exited above the noon hour’s high. Extending the rally without a pullback must begin by gapping up. Any other probe above Monday’s highs would be doomed to failure before the close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Overbought RSIs at Monday’s 1855.75 high require its retest. That need not be neutralized in any specific time frame. Its attraction could rescue a morning dip, and facilitate a durable probe above Monday’s highs.[/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 nervousness ahead of Sunday’s referendum… then Friday’s market could have declined sharply. Anxiousness paralyzed trending. Optimism fought against probing fresh lows. And that also kept the closing action ranging around prior lows instead of triggering a clean trend change. But the second consecutive lower close confirms Thursday’s break, requiring a third yet to come.

Pattern points… (Setups and technicals)[pay]
lows held through last hour’s entry and then again 3:10-3:20

Thursday afternoon was choppy, but held the 1838.50 low that printed coming out of the noon hour. Overnight action was choppy, and so was all of Friday’s session. Those both chipped away at 1838.50.

Ranging narrowly Friday at 1838.50 would have been vulnerable to probing fresh lows, whether before or after the weekend. But its break wouldn’t have been likely to trend down. The congestion of ranging narrowly would attract price back to it.

Choppy ranging like Friday’s is as likely to probe fresh lows. And then keep going. The choppiness is like a pitcher’s windup, letting go at almost 100 MPH. Extending down sharply is likely so long as it’s not a wild pitch triggered by favorable weekend developments — more so than just a relief rally in the absence of anything new that’s negative.

Friday’s last-minute dip did probe fresh post-open lows. Being last-minute, the probe originated too late to be that pitch. And it reacted back above prior intraday lows — like Thursday’s low, which didn’t prevent extending down the next day.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This should be one of our more interesting Saturday Strategy Sessions, if not one of the most compelling to attend — or, to watch its recording. It won’t last any longer than the normal hour, but WE’LL BEGIN 30 MINUTES EARLY AT 9:00AM ET. Instant analysis of stock requests will be taken.[/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.