Market Wrap

If Monday morning’s probe of fresh highs is repeated Tuesday… then either a breakout attempt is underway, or else the rubber band is about to snap back down sharply. Unlike the pattern since Wednesday morning, the sideways ranging is much less an option.

Pattern points… (Setups and technicals)[pay]
Friday’s late surge above the pivotal 1627.25 level was probably weak-handed. Monday’s open proved it. The only way to extend higher was by expending all available near-term selling pressure down to 1623.25 — early, through the 10:15 bias timing window, before counter-trend  buying pressure would become too inhibited.

Similar to Friday, Monday’s surge to its 1633.25 objective was probably also weak-handed. Monday afternoon proved it, as the balance of the session ranged sideways.

So, the consolidation since last Wednesday wasn’t ready to roll over, and still isn’t. But neither was it ready to launch a rally, and still hasn’t. Thursday and Friday’s impatient buying at its lows didn’t prevent probing a fresh high. It only prevented a fresh high from extending.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday ended at 1631.00 resistance. Its recovery could have put into play 1640.00. Not reacting down from it early Tuesday could just as well extend higher to 1640.00, anyway. Otherwise, any new downside Tuesday must either quickly reject a fresh high, or else extend down under 1627.25.[/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 late surge had begun just 10 minutes earlier… then perhaps it would have been credible for closing above relevant resistance. But that was no longer a relevant timing window, so its sponsorship was not strong hands. We’ll discuss this and individual stock requests in the Saturday Strategy Session at 9:30am ET. Hope to see you there…

Pattern points… (Setups and technicals)[pay]
Of course, that relevant resistance is 1627.25. It held again, and again and again, but ultimately didn’t. And that’s just Friday. But the afternoon’s surge originated during the position-squaring window, rendering it irrelevant. Unless…

Actually accomplishing something with the late surge could have made it relevant. Friday’s late surge did produce a new high close, sort of. Actually, its 1629.75 close was still testing Wednesday’s 1628.75 high close. Both were under Thursday’s 1632.25 intraday high. Friday’s session did not trend to a new high close.

Problems at Friday’s lows joined the problems at its highs. At least the morning’s last two dips stopped optimistically short of touching Thursday’s 1620.00 lows. And those lows had their own issues of excessive optimism. After an extended or productive decline, impatient buying can be productive and extended, too. But never durable, and neither should the excessive optimism at 1620.00-1621.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
None of which is a sell signal. But half the week ranged widely around Wednesday morning’s 1627.25 high, almost closing at it. Wednesday morning’s high was scheduled to be a momentum peak. Extending higher would be bullish, at least for very near-term price. Delaying any higher highs would suggest that momentum remains peaked. [/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 close wanted to be bearish… then it had sufficient time to do more damage. That doesn’t mean Friday can’t behave bearishly instead, but it does represent a missed opportunity for sellers to retake control from a pivotal area.

Pattern points… (Setups and technicals)[pay]
Wednesday’s pattern allowed its price action to be combined with Thursday’s resolution to form a setup. Thursday’s probe of fresh highs tested and retested 1631.00 before plunging back under Wednesday afternoon’s 1622.50 low. But that low held — and, anyway, a bearish setup required closing under Wednesday morning’s 1618.50 low — so no bearish setup formed.

1627.25 did continue to hold as resistance through all relevant timing windows. Probes above 1627.25 continued to drop sharply back under it, indicative of weak-handed buyers. Thursday’s last-minute bounce originated from AT its 1620.00 prior low, and not from below it, and the bounce fulfilled ONLY all of its potential buying pressure. So, buyers once again gained no traction despite probing more fresh highs.

Thursday missed an opportunity to signal that buyers were done, and that sellers were retaking control. Sellers may be done, and buyers may be retaking control. But now Friday’s close is the earliest opportunity to signal it. And a new high close Friday would signal just the opposite.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping down Friday under 1615.25 would serve by proxy to signal the reversal that would have been signaled by closing Thursday under 1618.50. Almost any gap down would be likely to bounce back up to 1621.00. Meanwhile, recovering 1627.25 and 1629.50 through any relevant timing window would be bullish.[/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 Wednesday afternoon’s drop had gained traction… then a much steeper slide was likely to close under the morning’s low. The drop’s complete retracement doesn’t prevent that lower close for Thursday. And it doesn’t make it any more difficult. It does make the upside more substantial otherwise.  

Pattern points… (Setups and technicals)[pay]
The multi-session pattern of upward momentum into Wednesday morning was fulfilled up to its 1627.25 high. Although a dip down to 1622.50 was recovered to fresh highs at 1629.50, the morning’s high was still being retested. Probed, but retested. So, the pattern of upward momentum into Wednesday morning has yet to extend any higher.

To be sure, the pattern of upward momentum has not been reversed. An opportunity to form a Pivot Reversal ended prematurely when the afternoon’s aggressive drop proved to be brief. And the multi-session upward momentum’s potential to 1631.00 was never fully realized.

But the late bounce probed above the noon hour’s high only AFTER the 3:10-3:20 timing window. Its sponsorship was not strong-handed, despite extending higher. Weak hands extended higher, AND fulfilled buying pressure at 1629.50.

This allows Thursday’s action to be combined with Wednesday’s to form a two-day setup. Combining two sessions does raise the burden of proof on any setup, so delaying a reversal down Thursday probably won’t reverse down at all. Reversing down with being aggressive would be suspicious, too.

[/pay]What’s Next… (Outlook and opportunities)[pay]
That potential for a two-day setup could still form a bearish Pivot Reversal by closing back under Wednesday morning’s 1617.00-1618.50 lows. And having trended up into Wednesday’s close, gapping down Thursday under Wednesday afternoon’s 1622.50 low would trigger a session-long decline. Almost any lesser selling pressure would default to being bullish.[/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 Dow’s prior thousandaire levels have begun near-term tops… then should Tuesday’s 15,000 mark resolve differently? Maybe initially, with confident buying pressure suddenly finding the has stopped again, with even fewer chairs remaining.

Pattern points… (Setups and technicals)[pay]
Tuesday’s rally to fresh highs above 1515.25 was underway into and out of the open. A steep, deep reaction down to 1611.75 ended abruptly, and then recovered ploddingly back into positive territory. Then the rally resumed.

The bias environment probed fresh session highs, and then the rally stopped again. This pause never threatened to reverse down, but the rally didn’t resume. The position-squaring window came and went, within a 2-tick range either way of 1621.00.

The two-day pattern through Monday’s close was likely to repeat. If Wednesday also follows the template, then it will not close above Tuesday’s highs — although fresh highs intraday are likely. The actual ranging and the actual close would all but dictate Thursday’s pattern.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday afternoon’s 1623.75 bias-up target became unfinished business above. It was too close to the afternoon’s ranging at session highs for a hold-long to be compelling. There is still vulnerability to probe up to 1631.00 Wednesday, if not already overnight. Meanwhile, a dip has room down to 1615.00-1618.00 before threatening to reverse momentum 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.