Market Wrap

If there is no unfinished business above… then must Friday’s late plunge extend down? No, but Friday’s highs need never be touched again. Friday abbreviated session was incapable of being predictive, so avoiding the late plunge wouldn’t have been bullish. Monday’s session has an opportunity to define the next significant trending.

Pattern points… (Setups and technicals)[pay]
Two “new Globex trend extremes” were neutralized Friday. More important than neutralizing the oldest one — last Sunday night’s 1809.25 extreme — was neutralizing Thursday morning’s 1810.00 fresh higher high. Similarly, Friday’s morning’s 1812.00 bias-up target was neutralized just minutes after being put into play.

The market is getting faster at neutralizing upside attractions. And it didn’t leave any new ones outstanding to maintain the rally’s momentum

Neutralizing a fresh upside attraction doesn’t allow it to attract more sponsorship that might defend its reaction down.  And Friday did react down. Any credible reversal down had to be aggressive, and no longer being aggressive would mean the reversal down had ended. Friday’s plunge under the 1810.00 sell signal lasted 15 minutes from 3:37-3:52, which is the same pre-close timing as the daily position-squaring window.

Friday’s late plunge might not have been predictive. But it reversed earlier gains that were less relevant.

Chipping away all week at 1806.50 resistance had earned at least an obligatory probe higher. Closing back under 1806.50 on a normal day would have suggested the probe had gained no traction for its effort. Closing back under its 1798.50 interim low would have signaled momentum reversing down. Resuming the rally Monday would mean Friday’s sellers were irrelevant.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There is NO Saturday Strategy Session, this being a holiday weekend. But don’t hesitate to request any chart analysis as needed. [/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 Thanksgiving’s volume constraints persist Friday… then will its shortened session have a different pattern than Wednesday? Probably, although Globex action on Thursday might make some difference. But as of Wednesday’s close, there is attraction above and no resistance. Probing above it, or reacting down from it, could trend in that direction through the early close.

Pattern points… (Setups and technicals)[pay]
1806.50 resistance has been chipped away every day this week. Wednesday’s opening surge probed it, the morning ranged around it, and it was recovered into close after dipping intraday to 1801.25. At least an obligatory probe above 1806.50 is likely.

One or two attractions above want to facilitate that obligatory probe. Wednesday morning’s 1807.50 overbought RSIs qualifies as one attraction, barely, being the product of an errant tick that was otherwise recovered. Sunday night’s 1809.25 Globex trend extreme has yet to be tested intraday, which is almost historically mandated.

Bouncing exclusively between support and resistance is possible Friday like Wednesday’s session. But it’s not the most probable — not if the attraction above is retested. At that point, the week’s congestion below would be more attractive, and thin participation would inhibit extending further above it.

Breaking lower is possible, too. But gapping down in a thinly traded environment would likely be only temporary, regardless of there being unfinished business above.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The Chartroom is open during Thanksgiving’s Globex trading. Friday closes early at 1:15pm ET. There is no Saturday Strategy Session this weekend, so be sure to request chart analyses 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.

If this were not a holiday-truncated week… then Tuesday’s session would have neutralized at least the attraction above or below. Perhaps it could have tested both. At least Tuesday attacked both to within 2-3 points each. Both remain outstanding.

Pattern points… (Setups and technicals)[pay]
Actually, Tuesday’s low came within 3 points of the 1796.00 unfinished business below. Tuesday’s high came within 2 points of unfinished business above at 1809.25. There is no timing requirement for retesting either.

Tuesday’s high did neutralize the retest of Monday’s 1806.25 opening gap. Its reaction down was delayed, but it was still productive, falling nearly 6 points to 1801.25. So steep of a reaction down doesn’t necessarily mean sellers are stronger-handed — the plunge stopped magically upon retracing 61.8% back to the morning’s low, which is a normal corrective measurement.

The new high close requirement wasn’t so much fulfilled as it was neutralized Monday closing at Friday’s futures close. Firming into Tuesday afternoon’s 1807.00 high was promising to definitively fulfill the new trend high close requirement, but that didn’t happen. Regardless, the message is not to become complacent if new highs are probed intraday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday’s session is normal-lengthed, but its participation is not. Liquidity may be noticeably lower in the morning. Liquidity will only be less in the afternoon. Remember that this is a risk unto itself, not only for interfering with entry and exit attempts, but also for obscuring the price action upon which those entry and exit decisions are made. Many traders choose not to participate in such an environment. [/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 fresh highs were left outstanding Sunday night… then does that prevent trending down substantially without any further hesitation? If anything, it makes trending down suddenly and substantially the only credible path down. Beginning any later this week would be likely to be only shallow.

Pattern points… (Setups and technicals)[pay]
This Monday’s comparison to last Monday’s pattern ended at the close. I had noted their similarities earlier in the day — gapping up from Friday’s new high close but going nowhere through the afternoon’s bias environment. There was difference before the open, Sunday night’s “new Globex trend extreme” at 1809.25. There was another difference later, the open’s gap up remained unfilled.

But both exited the bias environment with “unfinished business below.” Last Monday plunged to fulfill this objective before the close. This Monday left 1796.00 outstanding.

Last Monday’s late plunge fulfilled its objective, but it was too late to react up and prevent sellers from gaining traction. This Monday’s plunged a little in the last hour, and its sellers gained traction for closing under the noon hour and bias environment lows. But its closing price avoided negative territory.

And that alone — closing positive — could avoid duplicating a multiple session correction like the one that persisted through last Wednesday. Testing 1796.00 overnight would be more capable of holding, and being recovered before tomorrow’s open. Rallying first to retest the 1809.25 Globex extreme would be likelier to hold, having left outstanding the attraction down to 1796.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Unless Tuesday morning were exited in trending mode, extending through some relevant prior support or resistance, then the balance of the week will be difficult to start any trending any later. That means testing either end of the range would be easier to react back into the range, if not back to the range’s opposite end.[/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 Friday’s new high close requires at least one more… then Thursday’s impending holiday will be very influential to whether the environment remains bullish for awhile.

Pattern points… (Setups and technicals)[pay]
Friday’s new high close, like last Friday’s new high close and like all new high closes on a Friday, now requires at least one more new high close. Not necessarily immediately on Monday, just as no new high close last Monday did not prevent eventually fulfilling the requirement for a new high close eventually.

Probing a new high intraday Monday would be likely to fulfill the required new high close. If not reversed down Tuesday, then the rally would likely remain intact well into the following week. Holidays, like Fridays and expirations, just don’t produce lasting trend extremes.

Reversing down Monday could extend down through Tuesday. But seasonal holiday bullishness would inhibit trending down any later as the holiday begins nearing to within hours. In Friday’s last blog post I described the most difficult timing window of the week to generate reversal sponsorship (that being the afternoon’s final hour that has been entered at a new session extreme). That equates to the most difficult environment to reverse which is 1-2 days prior to a holiday.

Not that the uptrend is very convincing. Friday morning triggered noN-bias and the afternoon triggered no-bias. Rallying without a bias-up isn’t necessarily bullish. Although Monday’s close may be vulnerable to being a new trend extreme, Monday’s open is vulnerable to trying very hard to reverse the trend down — it wouldn’t succeed, but that might not be obvious for several days.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join us at 9:30am ET for this weekend’s Saturday Strategy Session. It’s link is found in the blog’s sidebar. We’ll discuss the bigger picture, and review any charts of interest.[/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.