Market Wrap

If another surge were to probe another new high… then would sellers finally let buyers have their way? Fridays can get carried away, and a lot of selling pressure has been expended. But another surge isn’t very likely, or at least isn’t very likely to probe another new high.

Pattern points… (Setups and technicals)[pay]
Thursday’s swing was not arbitrary. The pre-open surge peaked precisely at the 1774.50 level we have been discussing for the past week. The potential for a substantial intraday decline was described before the first hour ended. The noon hour contained the expected temporary bounce. And the drop’s lows fulfilled the next lower target at 1742.50-1743.25.

I wonder whether it also wasn’t arbitrary for the drop to close under prior lows Thursday. The same session printed a new extreme for the trend. That precludes the session from also signaling that the trend is reversing down. Not that Friday is precluded from being a horrible ugly downday — it just can’t be signaled. Especially not when the prior session fulfilled selling pressure at its low.

Even in the case of an initially favorable knee-jerk reaction up after the Employment Situation report, a bigger sell-off into the weekend remains possible, if not also likely. But back above 1756.00-1757.00 could still rob sellers of a lot of traction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
I will be in front of the market all morning Friday for the Employment Situation report. I will not be back during the afternoon (the Chartroom will remain open). Next week is all Kansas City, all the 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.

If simply retesting last week’s high could complete a near-term top… then there’s not much reason to expect much of a downleg to follow. While it is certainly turbulent up here at altitude. higher highs remain likely before reversing down substantially.

Pattern points… (Setups and technicals)[pay]
My last post during Wednesday’s session (also my only post, following the pre-open First Trade) described why sellers were probably not strong handed. Despite quickly reacting down 10 points from the open’s test of the 1769.25 bias-up target, the drop was only retraced further and further through the balance of the session.

61.8% was retraced up to 1766.50 through the noon hour’s exit. Two blips-up above it were retraced back under 1766.50. That measurement often proves to be a healthy correction before resuming the decline. This is probably different because the 61.8% retracement developed over so many timing windows, and since two subsequent timing windows failed to resume the post-open decline.

So, sellers aren’t strong handed, but buyers aren’t much stronger. At least they held Wednesday’s session in positive territory throughout the day. At least they left outstanding overbought RSIs at Wednesday’s 1770.00 high to require its retest. There’s still last Wednesday’s pre-open 1773.25 “new Globex trend extreme” that requires a retest intraday. And its retest would probably include 1774.50 and 1777.75.

Having said all that, triggering bias-down Thursday would be problematic to extending any higher anytime soon. The 1769.25 high neutralized the last intraday required retest (not including the test’s newly created overbought RSIs). Triggering bias-down would target a retest of 1756,00-1757.00, and there is no bullish reason to do that again. A top still seems to be forming, but be careful trying to get the last bit of it, like I am doing in the picture above (at a vineyard in Eparnay, which was much more allowing than was Moet and Chandon).

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thank you again for your indulgence this week in my absences (not just for me, but also for my traveling companions, seen nearby watching the Chiefs go 9-0 Sunday night at a Paris bar full of French “football” fanatics). It goes on. There will be no Market Tour on Thursday, but I will be back for the day before the first hour ends. I will also be available all morning Friday, which is the Employment Situation report, but not necessarily Friday afternoon. [/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 pullbacks keep chipping away at support … then potential for retesting the highs might be delayed for a deeper and drawn-out decline.

Pattern points… (Setups and technicals)[pay]
I had noted after Monday’s close that “Back under 1756.00-1757.00 again would have only one chance to recover from 1752.75, or else extend down sharply.” Tuesday’s drop tested 1752.75 by at least 2 points. And it recovered to test 1762.00.

And then the recovery peaked.

Not that the peaked recovery was soon replaced by a new downleg. But post-close action is trying. The last hour’s slide from 1762.00 is now testing 1756.00-1757.00 as support. Back under it again would have… I mean, had… one chance at recovery.

Nevertheless, I’m still reluctant to give sellers a benefit of the doubt. Tuesday’s break lower originated after all relevant sponsorship was finished for the day. And that was two timing windows after relevant sponsorship last acted. But if Wednesday’s open isn’t already rejecting and recovering from Tuesday’s late slide, then it is probably already trending down much further.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget I’m away from the market for most of Wednesday. I’m reasonably sure that I’ll be back for the last hour and Market Wrap. But there is no Market Tour or interim posts. [/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 cash premium to futures remains this wide for another session… then it will tie a record. Its 5.25 point premium already has been maintained for an unusually long period. Typically, that static is released by a sudden injection of volatility.

Pattern points… (Setups and technicals)[pay]
Monday’s session advanced toward last Wednesday’s 1772.25 “new Globex trend extreme” that requires being retested intraday. Buyers gained traction by closing above the morning, bias environment and noon hour highs at 1763.50. And they left “unfinished business below” at the morning’s 1752.75 bias-down signal.

Neutralizing 1752.75 first would have been bullish. It represents a 61.8% retracement back to Friday’s low. Retesting the highs from there would have found buyers refueled and able to extend higher.

Instead, 1752.75‘s test is left outstanding. And if Tuesday’s open were to gap up as suggested by Monday’s buyers having gained traction, then the gap back to Monday’s close would become “unfinished business below,” too. So, Monday’s bullish bravado — especially if repeated at Tuesday’s open — could be the rally’s undoing, for extending higher prematurely.

There is resistance at Wednesday’s 1769.50 opening gap whose test could intervene to further delay retesting the actual high. Retesting the actual high would be likely to visit 1774.50 in the process. All of which assumes that Monday’s high does actually extend higher. Back under 1756.00-1757.00 again would have only one chance to recover from 1752.75, or else extend down sharply.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget about this week’s truncated schedule. Market Tours will be missed on Wednesday and Thursday — with Wednesday being unattended entirely (a small chance of being available during the final hour and Market Wrap). [/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 sellers had more time than just one or two days… then could they have broken under “lower prior highs”? It’s starting to look like they want to see prior highs retested, first.

Pattern points… (Setups and technicals)[pay]
Chipping away at 1752.75 and 1750.00 support has its rewards. First, it might have consequences for not yet breaking lower. The 1750.00-1752.75 area’s relevance has been described here previously (also, view Friday and Thursday’s Market Wrap recordings for more explanation).

Testing, retesting, re-retesting… There has been enough of that there to have passed the point of borderline overkill. A break lower has become at least obligatory. Friday afternoon’s buyers failed to exploit that the session’s redundant tests of 1752.75 had held again. Buyers normally would have little problem leveraging the weekend’s impending illiquidity to exploit sellers’ hesitation at critical support.

But there is that hesitation. So, if sellers aren’t resuming and extending the decline immediately Monday morning, then we should expect buyers to be more opportunistic about the decline’s repeated reprieve. We should also then expect an aggressive rally that retests last Wednesday’s 1772.25 pre-open highs / “new Globex trend extreme” up to 1774.50.

[/pay]What’s Next… (Outlook and opportunities)[pay]
As there is no Saturday Strategy Session, we did a bigger picture overview during Friday’s Market Wrap. Its recording is linked here… Next week’s schedule will miss two Market Tours, on Wednesday and Thursday. In fact, all of Wednesday will be missed. There will be some other brief absences I’ll be able to list on those days. But I will definitely be involved in Friday’s 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.