Market Wrap

If there were no incident in Atlanta at Tuesday’s open… then would the intraday bounce have been so substantial? Would there even have been a rally but for those knee-jerk reaction trapped shorts getting squeezed? They might only have delayed a deeper drop.

Pattern points… (Setups and technicals)[pay]
Monday night’s slide had neutralized a lot of bearish influences. The delayed resolution under Monday’s 1638.00 low was likely to compensate for the delay by being aggressive. Check. The next downleg was likely to extend down to Friday’s 1625.75 low before hesitating. Check.

All of which was already considered bullish enough Tuesday morning for a morning bounce. Then an explosion in Atlanta triggered lower lows that filled the gap back to Thursday’s 1621.00 cash session close. Another  bearish influence neutralized. Check.

A recovery attempt was not required, but it wasn’t going to be difficult. In fact, the highest objective at 1638.00 was probed by 2 points before noon.

And that’s where the clock was reset.

Remember those bearish elements that were neutralized at Tuesday’s open? Now the bullish elements had been neutralized. Monday’s high was retraced by 61.8%. The bounce’s peak held a test of Tuesday’s 1639.00 “higher prior low.” Friday afternoon’s 1631.75 low didn’t hold as support. The afternoon bias-down signal triggered.  Its target was still being tested at the close.

Only overbought RSIs left outstanding at Tuesday’s high are undermining the decline. And that won’t be relevant if the decline resumes Wednesday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Weak-handed buyers prevented Monday’s rally from extending. And they didn’t prevent the Tuesday’s drop from resuming. The question is whether selling pressure was fulfilled by closing at the afternoon’s 1627.25 bias-down target. Oversold RSIs at Tuesday’s 1624.50 low requiring a retest — neutralizing them without extending any lower could form a near-term bottom. [/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 wanted to trend back down… then it had an excuse Monday. Two, actually. The post-open plunge rejected both bias-up parameters. And the afternoon’s no-bias environment chipped away at its bias-down signal. Gravitating through the close makes selling suspicious, at least without first probing a fresh high, or without trending down sharply to compensate for the delay.

Pattern points… (Setups and technicals)[pay]
Retracing Monday morning’s 10-point post-open plunge up to 1647.00 expended the most buying pressure allowed without gaining traction for the effort. Yet, there was no consequence other than retesting the plunge’s 1638.25 low to within 3 ticks. No new high was produced, so a lot of selling pressure was left pent-up.

The afternoon’s choppy ranging was entirely centered around its 1641.50 bias-down signal, and even closed there. Not pent-up pressure, but equilibrium, making two trending attempts likely Tuesday morning. Each should be convincing, in opposite directions, and retraced back to 1641.50.

Equilibrium can be escaped by gapping open beyond either end of Monday’s 1638.00-1648.00 range. If maintained through Tuesday’s open, then productive trending would be likely to extend in that direction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday’s ranging at its recovery highs, without reversing down, gives the impression that it knows some positive news is coming. This prevented considering a hold-short setup, as much as the equilibrium close.  [/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.

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Pattern points… (Setups and technicals)[pay]
Marginalizing sellers Friday morning would have opened the door to an intraday rally targeting 1644.00 and 1648.00. Sellers were marginalized, essentially, until they weren’t — or, at least, the rally lost its momentum buyers but sellers never gained traction Friday morning. A late surge touched 1644.00.

Not that sellers didn’t gain traction temporarily Thursday afternoon when the bias environment was exited under prior lows. The session already would have turned deeply negative by then had the morning’s bias environment been exited so weekly. A 10-point deeper dip than 1631.75 was still possible, but was avoided.

Buyers already had expended a lot of energy before Thursday’s 1621.00/1624.00 close. Friday expended another 20 points, and neutralized another major objective above. In fact, it was almost an afterthought, suddenly surging during the last half-hour from 1638.25 and then retracing all of it into the futures close, back under the morning’s 1642.25 high. So, all available buying pressure was expended without gaining any traction for the effort.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Unfinished business was left outstanding at the 1631.75 afternoon low’s oversold RSIs. It is likely to attract price down at Monday’s open, potentially to launch a new downleg. Gapping up through 1644.00 and probably also above 1648.00 would suggest otherwise.[/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 Thursday’s recovery from a new low does hold… then Friday’s reaction to the Employment Situation report could be explosive. After all, holding a test of the afternoon bias-down parameters was bullish. The question is whether that bullishness was fully satisfied. And if satisfying that bullishness went beyond its prerogative.

Pattern points… (Setups and technicals)[pay]
1614.75-1616.25 broke lower Thursday. That indicated three things: more discounting ahead of Friday morning’s Employment Situation report, probably all the way into the news, and potentially down to 1590.00. Actually, there was more discounting, down to 1596.50 at Thursday’s noon hour low, but the balance of the session rallied nearly 28 points to test 1624.00.

So, was 1590.00 tested as close as it will be? Did recovering 1614.75-1616.25 begin a recovery? Despite closing 8-9 points above it, we don’t yet know the answers.

That’s because Thursday’s last segment of the rally was not sponsored by strong hands. The 8-9 point probe above 1614.75-1616.25 came AFTER the afternoon’s bias environment had lapsed, and the last 3 points printed after the cash session close. Recall my warning in the blog about the vulnerability to a short-squeeze above 1612.00 — that tends to be the product of weak hands.

Weak-handed as the extra recovery may be, it isn’t predictive of the reaction to the report. But it does require a rejection to behave in a certain way — dropping aggressively under 1612.00. Not maintaining an immediate break under 1614.75-1616.25 would suggest that sellers are marginalized.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Marginalizing sellers Friday morning could rally intraday to 1644.00 or 1648.00. Sellers retaking control would target a test of 1590.00 “lower prior highs,” probably to under 1585.00.[/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 intends to rally out of Friday’s report… then satisfying all available selling pressure before then can only help. Right? Actually, resolving all selling pressure, and still reacting back up above resistance before the report. Buyers would be inhibited by a decline to new lows into the weekend.

Pattern points… (Setups and technicals)[pay]
A new predictive element appeared late Wednesday morning at 1614.75-1616.25. Entering and exiting the noon hour under the range has precluded the market from rallying into Friday’s Employment Situation report. Rallying anyway into the report would be likely to fail. Miserably.

More likely is that the current decline extend down sharply, further discounting a worst case scenario. This probably gets to 1590.00. Probably before the report. If only attacked by then, or if tested without yet reacting up, the report could trigger a break to even sharper lower lows..

Meanwhile, the gap back to the month-old 1606.50 opening print was retested Wednesday afternoon. Its influence on intraday action was obvious, but it has no relevance to the close. Much more relevant is something otherwise wholly irrelevant, and that is the poetic justice of completely retracing the interim rally.[/pay]What’s Next… (Outlook and opportunities)[pay]
The 3-minute RSI at Wednesday’s 1605.50 low was only on the cusp of being oversold, so its retest isn’t required, only likely. Not already resolving down while leaving unfinished business below did almost qualify for a hold-short setup. Its one problem is the potential for an interim corrective bounce. But extending the decline under Wednesday’s lows at any time should behave aggressively for what is already a delay.[/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.