Market Wrap

If Monday’s late dip had bounced even slightly before the close… then a hold-long overnight might have been compelling. That was the setup’s only missing factor. A couple of other factors then undermined the setup, too, no matter how likely at least a temporary fresh high may be.

Pattern points… (Setups and technicals)[pay]
Ooh, so close… The likelihood of retesting the 1592.50 two-week old high was reinstated last week — pretty much last Monday, when the decline’s consolidation up to 1550.00 did not break lower, and instead recovered 1555.50. That put price back into the orbit of prior highs.

Retesting the prior highs was already satisfied to one degree on Thursday, when the gap was filled back to its 1588.00 close. The pessimistic delay in testing it, and the impatient selling that reacted down Friday, was still bullish from a contrarian perspective. That bullishness was fulfilled during Monday’s 4-point probe above it.

The retest of the two-week old high had potential, if not a likelihood, for doing more than just filling the gap back to the 1588.00 high close. The high close was itself the second consecutive higher confirming close of a breakout. That normally produces at least one more higher close.

By a 2-3 tick margin, Monday’s 1588.75 close fulfills that requirement.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There remains potential for probing higher. Monday afternoon’s 1594.75 bias-up target is unfinished business above. And Monday’s last-hour dip all but fulfilled its 1587.00 limit. Deeper backing-and-filling is possible, but a probe of fresh highs Tuesday would be vulnerable to reversing down sharply intraday.[/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 had recovered back into positive territory… then the close could have made Monday’s open likely to surge. Instead, that’s likely only if the rally is going to resume. It doesn’t have to.

Pattern points… (Setups and technicals)[pay]
Friday’s session developed entirely in negative territory. That’s not bearish. Not necessarily. It does keep the door open to the bearish setup Friday’s open almost triggered, opening under a prior session’s low. Friday’s opening dip was too shallow.

Friday’s last hour probed above the bias environment’s high, which could have been bullish. But the bias environment’s low was tested into the close, so the earlier buying gained no traction for its effort.

Friday’s last-minute dip ended the cash session back at 1577.75, which had been resistance, and is now support. Closing above it Thursday put into play a retest of prior highs. Closing at it failed to invalidate the setup.

Friday left these mixed signals, and more. The burden of proof remains on buyers, but the door remains open to sellers regaining control.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join us this weekend for the Saturday Strategy Session. It’s a great opportunity to ask questions about the market’s bigger picture and specific setups, discuss different charting and technical analysis techniques, and request instant analysis of your own stock picks. See you Saturday morning at 9:30am ET. [/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 afternoon had not printed fresh session highs… then the last hour would not have been required to slide so sharply. A shallower setup could have undermined buyers, or prevented them from gaining traction. But both extremes of optimism and pessimism are very expressive as a retest of the highs is threatened.

Pattern points… (Setups and technicals)[pay]
Thursday’s probe above 1577.75 tested 1583.35. And then some. The probe above 1583.35 retested the two-week old high. Sort of. I’ll try to explain, but know in advance that there are two sets of conflicting signals.

Closing above 1577.75 puts into play a  retest of two-week old high. That was 1592.50 intraday, but its close was 1588.00. Thursday’s high was 1588.00. That doesn’t fulfill the buying pressure unleashed by closing above 1577.75, but it does neutralize the high’s attraction. In other words, there may still be some push from below, but not any pull from above.Conflicting signals.

Meanwhile, buyers gained traction only for closing above 1577.75. But buyers gained no traction for having rejected Thursday afternoon’s 1588.00 high to close back under its 1583.25 noon hour low. Also conflicting signals.

A rally to fresh highs above 1592.50 is possible, but would likely fail — on the day of actually probing fresh highs. Exiting the open under Wednesday afternoon’s 1571.00 low would invalidate the bullish signals, leaving only the bearish signals intact.

[/pay]What’s Next… (Outlook and opportunities)[pay]
ABSENCE ALERT: I will not be available until Friday afternoon following the First Trade blog post, and the pre-open Market Tour will not be held. I hope at least to update the morning’s Bias Parameters, and to publish afternoon Bias Parameters, if not also comment at some point on the open’s pattern.

[/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’s fresh highs had extended… then the rally from last week’s lows would be considered more than just a correction. At least there is still that possible outcome.

Pattern points… (Setups and technicals)[pay]
Since Tuesday’s test of 1574.00 wasn’t rejected, Wednesday had room for noise around it up to 1577.75. It was probed overnight up to 1579.00 before reacting down intraday to 1571.00. The afternoon recovered it very late up to 1578.50.

Too late, actually. Entering the final hour above bias environment highs and noon hour highs backed the recovery’s sponsors into a corner. Either extend the afternoon’s 6-1/2 point rally despite not having had a refueling dip along the way. Or, finally have that refueling dip, probably leaving no time for resuming the rally.

The rally peaked, and the drop fell to 1573.00. The close was still testing the relevant 1574.00 level, and not breaking under it clearly. The pattern remains equally vulnerable to extending higher as to reversing down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday morning could probe above Wednesday’s highs and still begin reversing down into the close, ending the corrective bounce from last week’s low. Regardless of Thursday morning’s action, closing above 1579.00 (the peak of Wednesday’s probe above 1577.75) would target new highs above 1592.50. [/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 twitter hoax were at all real… then its complete retracement — immediately, no less — probably wouldn’t have happened. But it would have probably trapped more shorts than did Tuesday’s momentary plunge.

Pattern points… (Setups and technicals)[pay]
Tuesday’s highlight was also its lowlight, that the mainstream AP twitter news feed could be hacked, and abused.

It’s unusual for the market to encounter such news, real or imagined. The most recent similar setup was way, way, way back on… last Monday. Both instances did offer a learning opportunity for the scenario.

That is, despite the likelihood of eventually retesting the plunge’s low,  the plunge’s origin tends to be a probed at some point. The Boston reaction was based on reality, so it remained under pressure for awhile. Its relief rally phase extended higher once the selling had ended. The AP twitter reaction was retraced entirely immediately, and required some time to absorb the shock to the system before rallying.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Actually, the relief rally phase wasn’t productive until after AAPL’s post-close earnings. But now that 1574.00 has held a test through the close, there is room for noise around it up to 1577.75 (it is being attacked post-close to within 3 ticks). Testing or probing it intraday Wednesday must close back under 1572.00 and preferably also 1569.00 to signal and confirm momentum reversing back down. Otherwise, higher highs would target 1583.25, and then very likely retest the two-week old highs above 1592.50.[/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.