Market Wrap

If Friday’s NFP were feared… then stocks would have dipped into the prior afternoon, Thursday. Instead, ranging around the open’s gap up failed to extend both higher and lower — not for lack of trying, but perhaps for lack of trying very hard. In either case, the report is preceded by more optimism than pessimism, which is potentially bearish from a contrarian perspective.

Pattern points… (Setups and technicals)[pay]
Thursday left no unfinished business above. The morning’s bias-up target was tested and held without triggering any new objectives above.

There is unfinished business below. Thursday afternoon’s dip to 1873.75 took RSIs oversold. Its low requires a retest. Neutralizing its test early without extending below it through a relevant timing window could marginalize sellers for the day. Maintaining a break under it could attract sellers all day long.

There is no upward momentum. Despite again probing new highs, Thursday’s entire range was contained within its opening surge. Its lower-end was supported by the prior two sessions’ upper-end. And those prior two sessions were glued to 1870.00. None of which precludes extending higher Friday, but only if at an accelerated pace.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There is no preliminary level before the Employment Situation report, but levels will be updated before the open.[/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 watched pots never boil… then it’s surprising that Wednesday’s session ever simmered. The morning swung widely from support to resistance and back again — and again, and again. That attracted onlookers, who held their break each time the range’s lower-end was revisited, gripping their seat arms tighter, preparing for that obvious break lower, when… oh, the suspense… a slight bounce back into the range ended the session essentially flat on the day.

Pattern points… (Setups and technicals)[pay]
Behavior since Tuesday morning touched 1870.00 has continually suggested that the rally’s sponsorship is waning. Higher and higher intraday probes that returned to or through 1870.00 reflected distribution. Wednesday’s ranging above 1870.00 probed only one higher high. And it wasn’t much higher, so it wasn’t really rejected. But it wasn’t accumulation.

The contradictory influences persist into Thursday’s session. Waning sponsorship among buyers, tepid responses by sellers. There remains a vulnerability to probing fresh highs, and a vulnerability to rejecting a probe of fresh highs. Breaking lower first would be credible, and could be productive, but not necessarily durable.

Like delaying a break until later in the day, delaying it until later in the week makes it less durable. Especially this week, with Friday’s pre-open Employment Situation report looming. Thursday afternoon trending would be suspicious, and less reliable to extend than would a breakout Thursday morning, which would already be suspicious.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Currency volatility on the pre-open ECB and BOE statements should affect Gold and Crude Oil. S&Ps often duck the volatility, as other markets funnel the steam. Be prepared to fade extremes that aren’t breaking decisively.[/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 Putin invades Poland… then this market could double!. That might seem to be the lesson of each new high overcoming every temporary reaction down to a development in the Ukraine invasion. Those knee-jerk reactions aren’t the story, they’re distracting from it. An understandable defensive dip against the unknown soon finds the development is otherwise irrelevant, and price recovers. But that’s all specific to the Ukraine invasion. This market can’t absorb another possible negative influence.

Pattern points… (Setups and technicals)[pay]
The next higher objective above 1856.50 was 1869.00. It was refined to 1870.00 and tested Tuesday morning. It was much more influential than the relatively shallow 3-point reaction down. Its attraction prevented the noon hour’s attack on 1872.00 from extending higher, and also encouraged the bias environment’s reaction down to recover from attacking 1866.00.

That last recovery extended up to within 3 ticks of the afternoon’s 1875.50 bias-up target. It was put into play by a late bias-up signal that didn’t require being fulfilled. The reaction down into the close fell to… 1870.00.

This follows the final hour’s entry that was still overlapping the noon hour and bias environment’s ~1872.00 highs. It also follows the 10:15 bias timing window overlapping Friday’s 1866.50 high. Buyers are losing momentum. Reacting down under a prior low would have meant sellers were gaining traction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Until then, fresh highs can be probed, and fresh highs remain vulnerable to resolving down. Friday afternoon’s 1875.50 bias-up target probably isn’t a viable peak, but reversing back under it through a relevant timing window would still be bearish. [/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 gapping down under prior lows can’t scare away buyers… then buyers have their eyes set on new highs. They should be careful what they ask for. Absorbing Monday’s overnight plunge can expend a lot of buying pressure, potentially limiting their reward to only a slightly higher new high.

Pattern points… (Setups and technicals)[pay]
Closing under last week’s lows would reverse the trend down. Last Monday’s new high — which happened to be at the relevant 1856.50 target — was retraced down to 1837.25 during the week intraday, and down to 1832.75 Wednesday night. It was probed by Friday’s high

Both interim lows were tested intraday Monday. Both held. So, neither signaled that momentum is reversing down.

But not last week’s interim 1843.00 low close. Its support is relevant, too. It served as resistance intraday. Probing it repeatedly intraday was rejected, and hovering just under it before the close still failed to recover it. Being a trend reversal signal, closing under it signaled that the trend is reversing down.

It is only one signal, and the post-close surge probed back above it. So, I’m skeptical. Also, the signal was first tested at the open, and then probed considerably intraday. Just hovering under it at the close is far from decisive. Closing lower Tuesday would be entirely credible confirmation. Similarly, almost any initial rally attempt would be credible for extending higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
RSIs weren’t oversold at Monday’s 1832.25 lows, so no retest is required. That makes a retest likelier to be sponsored by strong hands, and likely to confirm Monday’s otherwise suspect trend change signal.[/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 tanks weren’t rolling by Friday’s open… then the weekend was likely to be greeted at new highs. Actually, they had not rolled by then, so new highs were probed. But, then… Suffice it to say, we have plenty to discuss in this weekend’s Saturday Strategy Session.

Pattern points… (Setups and technicals)[pay]
Friday afternoon’s bias parameter was instructive to Friday’s close. Its bias-up signal was still being overlapped at 1:20 to invoke the grace period. It was still being tested at 1:30 to trigger noN-bias. That wasn’t a sell signal, but it reflected weak-handed buyers expending valuable energy without gaining traction for their effort.

Similarly, the close was still overlapping Monday’s 1856.50 high. The bounce from 1845.50 had expended valuable energy back to the pivotal level, without gaining traction for the effort. The post-close surge to 1861.00 doesn’t have anything to do with strong-handed sponsorship.

That’s not a sell signal. And while it does make the market vulnerable to drifting lower without news, I doubt the weekend won’t bring significant developments. But it does make the market vulnerable to reacting much more aggressively to negative news.

Friday’s close may have gone a step further. A post-close surge extended up to almost 1863.00, where the afternoon’s sell signals had originally triggered. Too late to gain traction for its effort, and then applying more effort. Look out below if the rally doesn’t resume immediately at Monday’s open.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Even extending the rally without delay Monday wouldn’t be immune to reversing down. Not that it requires being tested without a valid close above 1856.00, but there is room up to 1869.00. Testing it Sunday night or at the open would be extreme sentiment, and risk becoming a sentiment extreme. Oversold RSIs at the 1845.50 low could be retested 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.