Market Wrap

If Russian tanks don’t roll by Friday’s open… then the weekend could be greeted at new highs. Fully recovering from Wednesday night’s plunge shouldn’t be confused with the market being immune to conflict there.

Pattern points… (Setups and technicals)[pay]
The 10-point recovery from Wednesday night’s plunge extended through Thursday’s open to confirm the market has been basing. The recovery extended up to Tuesday night’s 1852.50-1853.25 highs to chip away further at its resistance. Dipping into the bias environment’s exit retraced a healthy 61.8% of the rally from the noon hour’s lows.

All that was required of the final hour to be bullish was not to extend the pullback. Fresh session highs weren’t needed to put into play higher objectives. Overbought RSIs left outstanding at the afternoon’s high would suffice for attracting price higher. The position-squaring window’s 4-point drop back to the earlier 1848.25 buy signal wasn’t necessary.

Retesting the high’s overbought RSIs is a technical objective. No higher price objective is in-play. A retest of Monday’s 1856.50 target isn’t required. But retesting it — and exceeding it through a relevant timing window — would make 1869.00 likely to be tested, too.

If Friday’s open doesn’t exploit multiple sessions of recovering from intraday sell-offs, and being greeted at the basing’s upper-end, then fresh lows for the week under 1833.00 would be possible. In fact, having trended up into Thursday’s close, gapping down under the afternoon’s 1847.50 low would trigger a “session-long decline.”

[/pay]What’s Next… (Outlook and opportunities)[pay]
Being Friday, the morning’s bias signal is likely to persist through the noon hour. Also being a Friday, a new high close would be unlikely to serve as the rally’s high. Thursday’s close was a new high, but didn’t probe Monday’s prior high — that qualification would be almost irrelevant on Fridays. Post-open econ reports might inhibit early trending in either direction, but can accelerate any trending already underway.[/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 Tuesday morning’s recovery attempt… then pent-up buying pressure could have launched an afternoon rally. Instead, an afternoon drop took the market back to square-one. Better luck next time… Thursday?

Pattern points… (Setups and technicals)[pay]
Wednesday’s session left outstanding a retest of the 1838.00 low’s oversold RSIs. It was the product of 3 errant ticks, and its retest came within 1 tick. Rallying prior to its retest could still extend, but retesting it first would be optimal. Overnight would qualify, similar to last week’s dip that held 1818.00-1819.00.

The afternoon’s plunge that produced the oversold RSIs was itself a retest of the morning lows oversold RSIs. Probing under the prior low still held through the close. That’s a lot of selling pressure — plunging, probing — without gaining traction for the effort. And that’s not bearish.

The afternoon’s plunge originated during a no-bias environment, so its sponsorship is weak-handed. A recovery back up to the 1844.75 bias-down signal was fulfilled to within 2 ticks, which is close enough not to become “unfinished business above.” But the bounce stopping pessimistically short of actually touching 1844.75 above — not to mentionhigher prior lows at 1846.00 — after holding the prior low’s retest, doesn’t speak well of sellers.

[/pay]What’s Next… (Outlook and opportunities)[pay]
None of which precludes probing even lower lows, in even the most bullish scenario. Whether a knee-jerk reaction to Yellen’s comments Thursday morning, or defensive posturing ahead of her appearance, holding 1834.00 support would still be likely to resolve up, and potentially extend to new 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 a top is premature… then Tuesday’s drop extended enough to attack or retest Monday’s highs. And a top should be premature. But not already rallying at Wednesday’s open would allow the morning to back-and-fill even deeper.

Pattern points… (Setups and technicals)[pay]
Tuesday’s bias environment exit was testing the noon hour’s lower-end as resistance, and so was the final hour’s entry. But the 3:10-3:20 timing window did trend down to fresh afternoon lows. That’s not very bearish, since it doesn’t assure probing lower lows Wednesday.

It’s not bullish, either, but that doesn’t mean Wednesday’s open won’t resolve up immediately.

Lacking fresh lows at each afternoon checkpoint keeps the door open to reversing up immediately. But gapping up is essentially the only immediate path higher, without having gained traction at the prior close. Tuesday’s last-minute surge prevents a gap up from forming a “session-long rally,” but it would still be a bullish morning.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping up Wednesday too shallowly could at least create room to absorb selling pressure, before the rally’s next opportunity to extend in the afternoon. Triggering an early sell signal would get a benefit of the doubt, but not much.[/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 had come Friday… then perhaps the bearish WedEX would have sent price down sharply today. Not that today was a success for the rally, having met its target at the high without putting higher targets into play.

Pattern points… (Setups and technicals)[pay]
The 1856.50 objective was first identified on December 26. The year-end attack wasn’t credible for extending higher, but that would have been the next higher objective (with potential to 1869.00).

1856.50 was actually put into play two weeks ago upon closing above 1818.00-1819.00. Confirming it the following day wasn’t any likelier to extend higher in a straight line. But correcting back down to 1818.00-1819.00 risked reversing momentum down.

The 1818.00-1819.00 pullback sneaked in overnight Wednesday when strong hands weren’t participating. Rallying to the 1856.50 objective was a straight line from there. Also a straight line? Monday’s reaction down from 1856.50 to 1847.00 before the cash session close, and 1842.00 after it.

Prior highs were still being attacked or tested as support at the close. Confirming Monday’s breakout with a second consecutive higher close is made difficult by Monday afternoon’s timing windows each probing the prior one. Fresh lows overnight would not be any likelier to extend down, but rallying first would be likely to resolve down in fresh lows.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The stand-in for this weekend’s Saturday Strategy Session was a bigger picture discussion held Monday morning in the Chartroom. It is linked here if you haven’t yet seen it.[/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 a WedEX influences Friday afternoon… then it is extremely likely to influence Monday morning, too. The bearish WedEX produced a fresh session low that probed back under the prior afternoon’s lows.

Pattern points… (Setups and technicals)[pay]
Friday’s session was never required to probe above Wednesday’s 1844.50 prior high, let alone even to attack the rally’s outstanding 1856.50 objective. One or both was possible on Friday, mostly because they remain likely at some point. And the bearish WedEX just further delays those upside objectives.

But trending up Friday morning, probing too much higher, would have required behaviors and unleashed new influences contradicting the bearish WedEX. The delay need not be too long, “lower prior highs” at 1829.00-1830.50 could be neutralized before Monday’s noon hour, with room down to 1824.50.

Extending higher instead Monday morning would be credible for probing the highs that Friday morning could not. Not gapping up considerably would more likely stretch the rubber band down before snapping back up into a rally. How considerably? Gapping up only 5 points to 1839.00 or 8 points to 1842.00 would still be likelier to spend the morning dropping back to Friday’s late 1832.75 low — which would fulfill the bearish WedEX influence.

[/pay]What’s Next… (Outlook and opportunities)[pay]
REMINDER: There is no Saturday Strategy Session this weekend. We’ll cover the bigger picture mid-morning Monday — I’ll send out an alert announcing the specific time.[/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.