Market Wrap

If Monday’s opening high was a precursor ro higher highs… then it should be recovered by Tuesday’s close. Other than to retest Monday’s lows and trap more shorts there, further delaying the rally’s resumption would be bearish.

Pattern points… (Setups and technicals)[pay]
Reacting down Monday from 1565.00 is one reason why the reaction down is relevant. Testing 1555.50 also makes it relevant. The test — both tests — are ongoing, and unresolved.

The test of 1565.00 above hasn’t been resolved, since the same session that contains a new trend extreme cannot also contain that trend’s reversal signal. Since Monday’s 1565.00 high is a new trend extreme, Monday’s session could not signal the trend reversing down.

1555.50‘s test hasn’t yet resolved either, since it was still being tested Monday at 3:57. Its recovery or rejection was needed no later than 3 minutes prior to the cash session close. It was finally probed higher, up to 1556.75, which was too late to represent 1555.50‘s recovery.

Ironically, the reaction down from 1565.00 is what keeps alive potential for resuming the rally. Despite reacting down so significantly from so significant a target, sellers were a little impatient for reacting down so quickly and bouncing so shallowly (about 38.2%). They also failed to extend the afternoon’s break under the morning’s low. But until proved otherwise, a bounce is likely to fail and resolve down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Regardless of the ultimate resolution, Monday’s 1552.50 low should be probed. Probing it early Tuesday and recovering back into positive territory would suggest that sellers had been absorbed. Otherwise, the decline is assumed to have resumed if Monday’s 1553.25 low fails to hold through a relevant timing window.[/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 fresh highs were not probed during Thursday’s pre-holiday session… then buyers wouldn’t have been criticized for not being productive. By the same token, actually probing fresh highs before the 3-day weekend doesn’t give buyers any greater traction.

Pattern points… (Setups and technicals)[pay]
Thursday’s opening action displayed once again the vulnerability at this stage of the pattern to probing and reacting down from fresh highs. But it was a shallow fresh high at 1559.50 — not even a new high, just the highest intraday print yet — so its immediate reaction down to 1554.75 didn’t fall too far or for too long.

That early reaction down helped to diminish selling pressure. So, a reaction down from the late-morning test of 1562.50 was also relatively shallow, holding 1558.25. Another shallow new high, another shallow retracement. The balance of the session could only range flat-to-higher, since it had become too late for counter-trend action.

Ultimately extending to fresh highs, but without RSIs turning overbought, suggests that price only drifted higher. This is not accumulation. Ending the day at 1561.75-1563.00 — essentially at equilibrium to the 1562.50 objective — suggests that the next trending attempt will also be retraced.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This being a holiday weekend, there is no Saturday Strategy Session. Please don’t hesitate to post any chart analysis requests to this blog post’s comments section… Have a very happy Easter![/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 open isn’t already trending sharply higher… then it’s going to be difficult extending any higher into or out of the weekend. That would also make it difficult to defend against trending down.

Pattern points… (Setups and technicals)[pay]
Wednesday’s gap down filled the gap back to Monday’s close, and held it through the open. Confirmed by also holding the 1547.25 bias-down target through 10:15, that was good enough to marginalize sellers for the morning. The afternoon extended higher, essentially by default, since sellers didn’t retake control.

But, now, buyers may have trapped themselves. Extending higher Wednesday afternoon filled the gap back to Tuesday’s close. Similar to the morning’s test of Monday’s gap below, now any attraction to Tuesday’s gap above has been neutralized. Its attraction above might be sorely missed Thursday  — especially if an opening dip were trying to hold an early test of 1550.50-1551.25 support.

An initial dip Thursday to only 1553.25 could still recover, even if only to temporarily probe fresh highs up to 1562.50 or 1565.00. Actually, recovering an opening dip to probe fresh highs IS likely still likely hold, and then to reverse down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Meanwhile, the 3-Day Weekend indicator wasn’t even passively bearish. Perhaps it was doubly passively bearish, since the only prior high to be tested and rejected happened overnight or pre-open. So long as Thursday’s opening 15 minutes of volatility doesn’t extend above 1560.50, subsequent probes of fresh highs are likely to fail.[/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 Tuesday morning’s rally weren’t blind-sided by an ominous headline about duplicating Cyprus confiscations to Spain and Italy… then an earlier probe of fresh highs would have had a likely resolution. Delaying the morning rally’s resumption until late-afternoon now allows Wednesday morning to have that same resolution.

Pattern points… (Setups and technicals)[pay]
Did a funny thing happen on the way to new highs? Monday’s close had failed to recover back above a prior high, which would have signaled the morning’s sellers were absorbed. That didn’t preclude Tuesday from attacking or retesting Monday’s 1560.50 pre-open high. That seemed to be the market’s intent.

Monday night’s narrow ranging above the afternoon’s 1549.00 highs reflected restrained optimism. The open didn’t delay surging through its 1550.50 signal. And the bias-up triggered easily. But the headline that prevented extending through 1556.00 shifted the market from offense to defense.

The balance of Tuesday’s session — until the final hour — was spent stair-stepping back up to retests of 1556.00. It wasn’t clear whether the “recovery” was from absorbing selling pressure, or just noise within the range. The morning’s highs were eventually probed, through its 1557.00 bias-up target.

Attacking or retesting Monday’s 1560.50 pre-open high Tuesday would have been likely to reverse price down sharply. There is still that vulnerability on Wednesday, from 1562.50 or 1565.00. Any higher could extend the rally into next week’s open.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A three-day holiday weekend is approaching. That makes Wednesday’s close predictive of trending into and out of the weekend. The timing is largely why a fresh high close Wednesday could be bullish through the weekend. Reacting down would not necessarily be bearish, but it would be a start. [/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 Monday’s reaction down from the overnight highs was refueling buyers… then the close should have recovered above a relevant resistance. Several relevant support levels did hold, but that doesn’t form a solid launch pad.

Pattern points… (Setups and technicals)[pay]
Monday afternoon’s bias environment exit was positioned to recover the noon hour highs, but that failed. The final hour’s entry had time to recover, but it didn’t. None of which would be important otherwise, except that either setup would have triggered a substantial short-squeeze. That short-squeeze would have suggested the morning’s renewed bias-up — which failed — was back in-play.

A short-squeeze also would have helped to invalidate the noon hour’s complete retracement back to Thursday’s 1539.25 close. Recall that was last week’s low close, late in the week, following two significant rally efforts in the interim. It is that low close which has kept us skeptical about a new rally leg.

And now three rally efforts have been rejected — including Sunday night’s most productive rally yet, to new highs at 1560.50.

Monday morning’s renewed bias-up could be resumed, in essence, by recovering at least 1550.50. But the alternative to rallying Tuesday morning is probably to be decline. Monday afternoon’s action should have finished with any ranging sideways.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s econ reports alone present a very unusual obstacle course, not including any Eurozone headlines that might come from nowhere. Knee-jerk reactions don’t seem to be gaining traction, so we’ll be suspicious of any sudden trending… Happy Passover to those who are celebrating Monday evening.[/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.