Market Wrap

If not for Thursday’s lower-volume… then would Wednesday morning’s surge have left a higher objective outstanding to keep its momentum pointing higher? It’s impossible to know, but I suspect that strong hands would have refueled Thursday by retracing, instead of hovering optimistically.

Pattern points… (Setups and technicals)[pay]
Did I mention that Thursday would be challenged by lower-volume? Or, that this would undermine setups and signals? I did? Good. So, the only surprise about Thursday’s price action should be that trending was attempted at all.

The open’s two pushes higher were maintained just long enough to trigger bias-up. But that was retraced back into a 1653.50-1655.50 range which absorbed breakout attempts through the close. Neither end of the range was probed by more than 3 ticks for more than 3 minutes before reversing back to the range’s other end.

Since greeting Wednesday’s noon hour at 1653.25 resistance, every subsequent timing window only ranged sideways. The exception is Thursday morning’s bias timing window which triggered bias-up, but the bias environment was exited back at Wednesday’s highs.

Buyers still had enough traction to prevent a downleg. A failed downleg would have fulfilled the equilibrium setup — after Thursday morning’s failed rally attempt — that is usually followed by stronger trending. So, delaying a durable trend either was self-defeating if its direction is up, or self-preserving if its direction is down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Regardless, it seems “ineffectually optimistic” not to have expended selling pressure in a lower-volume environment that could have dismissed it as weak-handed. Not to mention ahead of Friday’s Employment Situation report, that could have dismissed it as contrarian. An initially favorable knee-jerk reaction isn’t the only path to probing fresh highs without gaining traction. Not that fresh highs are required before trending down.[/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 the afternoon econ report… then would Wednesday morning’s rally have been more restrained, its buyers more patient? Probably. But no buying pressure was left outstanding to attract price higher, leaving the next most bullish scenario — namely, at least sellers didn’t gain traction.

Pattern points… (Setups and technicals)[pay]
The morning’s rally got carried away. Not gapping down did suggest that sellers wouldn’t be a problem, as did holding a test of relevant support. But the the one-sided 18-point move from 1635.50-1653.50 was likely exacerbated by the impending low-volume environment.

The 1653.50 resistance was met and held at a key time without exceeding it. The afternoon’s low-volume environment probably exacerbated the market’s lack of reaction, ranging sideways between 1651.00-1653.50. Probes beyond either end reversed back into the range.

Even a late plunge was probably exacerbated by the low-volume environment, as confusion surrounding an otherwise pointless headline triggered a drop from 1654.25 to 1649.50. Its reaction bounced back into the range, but only halfway, as the low-volume environment still inhibited trending.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Ranging sideways through several consecutive timing windows suggests there is no sponsorship for trending. But closing back at 1653.50 suggests that trending will be attempted, probably two or three times, each in alternating directions. I call it “equilibrium,” and while not a requirement, the setup usually produces actual trending (not just probes) beyond both ends of the range — probably to 1661.00 above and to 1643.00 below — before finally extending.[/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 Syria action delay weren’t announced until Tuesday… then buyers might have gained traction for their efforts. But confining the double-digit reaction to its lowest volume timing window, and not extending any higher intraday, only trapped weak-handed longs. That seems to have been the market’s intent.

Pattern points… (Setups and technicals)[pay]
Surely, the majority of observers of Sunday night and Monday night’s rally wondered only how much higher it might extend Tuesday above 1648.50. Filling the gap back down to Friday’s 1631.25 close was hardly being considered.

Yet, that was Tuesday’s low, attacked to within2 ticks and probed by 2 ticks, fulfilling the afternoon’s bias-down target. That price action also represents chipping away at 1632.00 support, a prior low that had attracted last week’s drop.

1632.00 has produced several bounces, ranging from small to substantial. It remains capable of doing so again. That doesn’t minimize the vulnerability to Wednesday’s open extending down sharply under 1632.00. So much time was spent Tuesday chipping away at its support, that rallying here would be suspicious.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The vulnerability to extending down immediately is based on the reaction up from 1632.00 holding a test of its 1639.00 bounce limit, and the cash session closing under 1637.00. It did. Futures did surge to close 2 ticks above 1639.00, but any initial selling pressure under 1633.00-1634.00 would be likely to resume the decline. [/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 the impending holiday weekend… would the morning’s decline have fallen as far as it did, or would it have fallen further? Not that the morning’s drop was very deep, but it was relentless. And the afternoon’s attacks on prior lows seems eerily and inappropriately optimistic.

Pattern points… (Setups and technicals)[pay]
Friday’s initial 15 minutes of volatility trended down, immediately undermining any recovery effort fro the balance of the day. In fact, the pattern never reflected any accumulative activity. But only the morning’s bias environment trended down.

The balance of the session was certainly choppy, and wide-ranging. That didn’t help two attempts to trend down, which were very productive, but also retraced entirely. Retraced… but not recovered.

The afternoon’s two slides to 1626.00 from 1632.00 and later from 1633.00 both reacted up sharply, each forming a “V” reversal. One “V” is not a bottom until retested without forming another “V”. Two “V” reversals only chip away at support. Friday’s last-minute reaction up from testing 1626.00 did at least recover back into the noon hour’s range at 1629.75. The reaction up extended to 1633.75 before the close. Had the setup appeared on any day other than ahead of a weekend, then it would have been considered for short-entry through the close.

Unless fresh lows have tested 1618.00-1621.00 — even if only Sunday night or Monday — no rally would be durable. Gapping up anyway Tuesday above Thursday’s ~1636.50 close could retest last week’s 1667.50 high before resuming the decline. Regardless, simply ranging sideways Tuesday is unlikely.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget this being a holiday weekend, there is no Saturday Strategy Session. But the Chartroom will be available beginning Sunday night as normal for the Globex open. And I’ll have updates as price action makes necessary. Meanwhile, have a relaxing Labor Day 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 the market were certain of only limited Syrian action… then would it already be rallying out of the current range? Or, would it be waiting for a negative knee-jerk reaction to the first offensive, buying up the sell-off? I wonder if it’s either, if a favorable knee-jerk reaction to a limited attack would fatten up prices just enough to attract sellers.

Pattern points… (Setups and technicals)[pay]
Thursday was a day of second consecutives — all but the one that would have made a difference. A second consecutive morning recovery from a second consecutive pre-open dip, a second consecutive noon hour high and its second consecutive mid-afternoon slide.

A second consecutive steep downtrend into the close, with buyers failing to gain traction for a second consecutive day. A second consecutive higher close would have changed that, and would have been likely to rally into the weekend. At least sellers didn’t gain traction for a second consecutive day. But they almost did.

There isn’t much room to bounce again Friday, not if the decline were going to resume without first rallying to a significant degree. However, there is much room for selling pressure to be expended, and to still recover into the 3-day holiday weekend as its impending illiquidity squeezes shorts. Wednesday’s 3-day weekend indicator suggests that any fresh lows won’t be recovered

[/pay]What’s Next… (Outlook and opportunities)[pay]
This being a Friday, the morning’s bias is likely to persist through the noon hour. And this being a holiday weekend, don’t forget that there is no Saturday Strategy Session. Be sure to ask me in the Chartroom during market hours for any chart analyses that you need.

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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.