Market Wrap

If WedEX had triggered after probing a prior high or low… then strong trending would have been likely. Whether an active signal or passive, probing lows that have been attacked for so long would have substantial consequences. But Wednesday avoided testing both prior highs and lows.

Pattern points… (Setups and technicals)[pay]
Wednesday’s sellers gained traction by closing under the afternoon’s bias environment low, which was under the noon hour low. Not that the sponsorship was strong-handed, since it was an “inside day,” i.e. trading entirely within Tuesday’s range. There is no required resolution, but there are specific requirements to specific resolutions.

In other words, Tuesday’s slide is not required to extend any lower Wednesday, but extending any lower Wednesday would be required to be productive and test a relevant lower objective. Neither is Tuesday’s slide required to recover Wednesday, but recovering Wednesday would require gapping up.

Meanwhile, recall that Tuesday’s buyers had gained traction. While that did enable recovering the overnight drop, albeit only temporarily, it might also offer a bullish context to Wednesday’s bearish elements. Sliding throughout the session produced only an inside day. The intraday slide developed during two no-bias signals. Despite sellers gaining traction, sellers probably were not strong hands.

[/pay]What’s Next… (Outlook and opportunities)[pay]
That’s all doubly interesting for being a WedEX session, but only to suggest there won’t be an expiration bias. Gapping up Thursday would be credible for extending sharply higher intraday, but not necessarily into and out of the weekend. Extending down would not be any likelier to recover. In any case, Wednesday’s inside day is meaningful, but not yet predictive. [/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 buyers aren’t rewarded for recovering from Tuesday’s deep dip… then there must be some substantial downdraft on its way. Last Thursday’s complete retracement never gained traction, so its shortcoming can be dismissed. But Wednesday really has no excuse.

Pattern points… (Setups and technicals)[pay]
Another big dip, another complete recovery, and another sideways ranging afternoon. So, what else is new.

Well, for one thing, Tuesday’s big retracement back to the big drop’s origin was a recovery above the morning’s highs. That’s because the drop’s 1694.00 origin was pre-open. Retracing it from 1679.25 recovered above the 1690.50 post-open high. And held.

Buyers gained traction for their efforts.

That hasn’t yet happened on any session since last week’s highs. The immediate result has been either to extend down the following day, or to reverse down from an overnight rally. This setup is the best opportunity to rally through the day.

[/pay]What’s Next… (Outlook and opportunities)[pay]
And since buyers gained traction, rallying does not require gapping up. Declining does require gapping down — although gapping down can be absorbed, and does not necessarily require developing into a decline. So, I would prefer buying strength, or a qualified recovery from negative territory.[/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 Sunday night’s extreme sentiment were not absorbed so entirely… then perhaps Monday afternoon would have probed into positive territory. At least sellers failed to regain control, but they haven’t given up, yet.

Pattern points… (Setups and technicals)[pay]
Monday’s afternoon price action wasn’t entirely range bound, as a dip to 1683.00 bounced back up to 1687.50. But that didn’t exactly qualify as trending. The session closed under the morning’s high, so buyers gained no traction. And the session traded exclusively under Friday’s cash session close, i.e. in negative territory.

None of which is bearish. Potentially, but not necessarily. More so, these elements reflect a degree of pessimism.

Those pessimists kept a rally from forming, but they weren’t very productive otherwise. The dip to 1683.00 failed to probe any lower which would have triggered bias-down. The morning’s 1688.25 high stopped pessimistically short of probing into positive territory, but sellers gained no traction for that effort.

[/pay]What’s Next… (Outlook and opportunities)[pay]
And a buy signal that triggered above 1685.00 was confirmed above 1686.75. It essentially held its pullback limit to trend back up into the close. Still failing to gain traction intraday, the rally attempt must extend higher overnight if it intends to bleed into Tuesday’s session. Not gapping up would be problematic to a recovery, with no bullish reason to revisit Monday’s 1679.50 opening gap down. Meanwhile, initially targeting 1696.00, there remains potential to probe 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 Friday morning’s drop had happened any other day… then would it have attracted sponsorship to extend down through the noon hour? It’s a trick question. While the weekend’s impending illiquidity could be blamed for inhibiting new sponsorship from reinforcing the morning’s sellers, the drop might have been exaggerated by sellers acting prematurely or speculatively.

Pattern points… (Setups and technicals)[pay]
Friday’s bias environment and last 60-90 minutes each probed deeper under the noon hour’s 1689.50 exit. Haven’t seen that in awhile. The last window has probed under the bias environment’s low, or one of the two windows has probed under noon hour’s exit. But Friday afternoon essentially trended down.

Not that the trending was very productive. But the bias environment’s 1692.25 high was retraced down to 1686.75 before the cash session close, and down to 1685.50 after it. That was all without much effort by sellers, considering that RSIs avoided becoming oversold.

Closing any lower could have suggested a hold-short, although the illiquid weekend exposure is difficult to justify. Regardless of the timing, there are more signs of thin air beginning at 1696.50, and more instances of failing to recover it. Without an active sell signal, there remains potential to probe fresh highs, although rallying from so low could discover valuable buying pressure has been expended just when it is needed most.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join us Saturday morning for the weekly Strategy Session at 9:30am ET. We’ll look at the bigger picture much more comprehensively, discuss setups that occurred during the week, and game-out possible opens for Sunday night and Monday morning. Any individual stock chart requests will be analyzed, too. [/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 there was any reason for retracing all of Thursday morning’s plunge… then it probably wasn’t just to try plunging again. The afternoon’s narrow ranging delayed a resolution, but it should not have changed it.

Pattern points… (Setups and technicals)[pay]
Thursday morning’s 13-point plunge was stunning. More stunning was its complete retracement into the noon hour’s high. Although the recovery was no higher, and no quicker, such big drops aren’t usually recovered so soon.

Yet, Thursday’s most stunning development was the afternoon’s narrow 3-point range.

The prior several sessions had essentially ranged sideways, too. Tuesday’s was unlikely to range sideways, Wednesday’s was almost required not to range sideways. Thursday afternoon’s ranging can be dismissed for needing to absorb the morning swing’s shock to the system, although it didn’t have to — not after three prior afternoons ranging sideways, too.

But the most stunning development yet would be not resuming the rally at Friday’s open.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A last-minute dip Thursday finally probed beyond the afternoon’s range down to 1692.25, reacting back up as sharply into the futures close. An overnight retest down to 1690.75 should also be recovered and extended higher. “Unfinished business above” now includes Thursday afternoon’s 1699.00 bias-up target, along with last Friday’s off-setting 1706.00 bias-up signal. If they’re not attracting price higher into the weekend, then oversold RSIs at Thursday’s 1684.50 low can attract price lower.[/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.