Market Wrap

If recent highs are going to be probed… then Friday’s rally left the market positioned to easily get it done. Since buyers didn’t gain much traction for all of their effort Friday, resistance is that much more difficult to overcome, and easier to push back.

Pattern points… (Setups and technicals)[pay]
If there were going to be a short-squeeze, it is is likely to happen during the position-squaring window between 3:37-3:52. Friday’s last-minute surge originated after 3:57 at 1548.00 and ended 6 points higher at 1552.00. To the degree that it was a product of big money, it was big money position-squaring. But it was not the work of “strong hands.”

Not that sellers are strong hands. They missed every opportunity to regain control — holding above prior lows, firming as timing windows ended instead of deteriorating. While buyers held up, they also held back until the last-minute surge. Until then, the noon hour and bias environment highs were holding.

There continues to be only one reason to give sellers any benefit of the doubt, and it’s a big reason. Last week’s low close came Thursday, after two big intraday rallies. But that might be enough only to ensure that a probe above the 1558.75 prior high will fail, and not enough to prevent the higher high.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Friday’s late surge originated too late to be predictive. But it does set the stage for Monday’s open, if not also for Sunday night. Immediately rejecting the surge back to and through its 1548.00 origin would be likely to extend down and do everything that Friday’s sellers did not. But extending higher would suggest that fresh higher were in-play. [/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 sellers gained traction for their efforts… then no bounce is required before extending down Friday. So, not exiting the morning’s bias environment in decline could be bullish. Not rejecting a strong gap up could be bullish, too.

Pattern points… (Setups and technicals)[pay]
Thursday’s 1539.50 close was the lowest in three weeks. Two of this week’s sessions have traded lower –Sunday night down to 1529.50 and Tuesday down to 1532.00. Yet, two steep and sizable rallies since then haven’t been enough to avoid a new relative low close.

A “hold short” through Thursday’s close was avoided narrowly by closing and settling at the afternoon’s prior low, instead of below it. But the afternoon’s “V” bottom at 1536.50 requires a retest, not only because of its oversold RSIs. There isn’t much room above to absorb buyers unless another rally is underway, although not sizable at this stage of the pattern if it still intends to resolve down.

Thursday’s widening intraday dips, failed interim rallies, and its new low close aren’t very pretty. All suggest that more selling is coming, it is intent upon new relative lows, and that those new relative lows will be much lower.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday’s closing action trended down. But the afternoon’s 1544.50 high printed just into the final hour, disqualifying its recovery from triggering a session-long rally. That doesn’t mean gapping up above 1544.50 Friday wouldn’t be bullish, but its session would not necessarily end at its high point. Especially on a Friday, which doesn’t often tend into the close if the morning already trended. [/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 rally has resumed… then it should be obvious immediately Thursday. Unfortunately, a false break higher would like very similar, initially. The more alluring the attempt in this pattern, the likelier that it is false.

Pattern points… (Setups and technicals)[pay]
Wednesday’s last half-hour produce a 4-point surge that probed the bias environment’s 1555.50 high. But only momentarily. Its reaction down under 1552.75 put into play fresh session lows, which was fulfilled down to 1448.00. But only after the cash session close.

The timing of fulfilling the target doesn’t matter, not like the timing of triggering a signal, which does matter. So, waiting until after the cash session close to fulfill the target still fulfills the target. But waiting to break under the session’s low doesn’t put into play lower lows.

The setup did have potential, if not a likelihood, of also testing 1546.50, which is still possible. If test it would likely be recovered before Thursday’s open. Wednesday’s late drop is also likely to be recovered before Thursday’s open. That is, if the rally intends to extend and retest last week’s 1558.75 high.

If Thursday’s open isn’t already rejecting Wednesday’s late dip, then under 1545.25 would signal a retracement of Tuesday night’s rally underway, if not a resumption of the decline.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The trend change that barely triggered Monday, and which was only dubiously confirmed Tuesday, was clearly invalidated Wednesday. Obviously, that wasn’t being taken seriously anyway, so it doesn’t affect anything. But another trend change signal should develop within 2-3 days, unless a bigger rally is underway.  [/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 a new downleg is underway… then must it extend down without delay? Probably, at this stage. So, delaying lower lows would suggest a new downleg is not underway.

Pattern points… (Setups and technicals)[pay]
Monday’s borderline trend change signal cried out for validation from a lower close Tuesday. Just closing negative wouldn’t be good enough. At least Monday’s intraday low needed to be retraced, or attacked. In fact, it was probed, so was that good enough?

Maybe. Probing under Monday’s low without closing under it means those sellers were impatient, pushing lower without strong enough sponsorship to maintain the break. Just attacking the low would have been more bearish. Still, since Sunday night’s low was never probed, despite Tuesday’s low coming so close, sellers were a little patient.

But they had better regain traction immediately Wednesday. Tuesday afternoon’s fresh session low was recovered to close back above the noon hour’s high. A similar inverted setup undermined Monday’s buyers. And just as Monday’s buyers needed a gap up Tuesday to regain control, Tuesday’s sellers need a gap down to regain control Wednesday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping down under Tuesday afternoon’s last relative low at 1536.00 would signal momentum reversing back down, at least to probe under Tuesday’s 1532.00 low. But a gap down under the 1532.00 low would trigger a “session-long decline” that can do much more damage. Otherwise, opening Wednesday above 1546.00 — if not also above 1549.25-1550.00 — would put into play 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 the six “strikes” described in yesterday’s Trading Plan were valid… then Sunday night’s plunge fulfilled them. Admittedly, Cyprus confiscating bank accounts never occurred to me. No further downside is required because of any residual effects from Friday. Now, any further downside must be the product of new price action from Monday. There isn’t six strikes, but there are two or three big ones…

Pattern points… (Setups and technicals)[pay]
The most bearish influence is the Up/Down-Crash indicator. It has been reflecting a very overbought condition that often resolves by reacting down sharply for multiple sessions. Any follow-through Tuesday would suggest that this setup’s down-crash is underway.

A second bearish influence is Monday’s close under last Tuesday’s 1546.75  prior low close. That would trigger a trend change signal. The cash session close wasn’t much lower at 1545.50, so this signal cries out for confirmation Tuesday.

Finally, the third bearish influence is similar to one of Friday’s strikes, which was a missed “ineffectual pessimism.” Gapping down, spending the entire session in negative territory and probing prior lows did NOT probe fresh lows during the afternoon. Recovering from that would have trapped shorts. Like Friday, buyers were impatient

[/pay]What’s Next… (Outlook and opportunities)[pay]
It’s not usually difficult separating knee-jerk headline reactions from valid breakouts, especially when the reactions resemble trends. Monday afternoon’s two reversals were examples. But if the bearish influences are valid, then no further bounce is likely. If the bearish influences are NOT valid, then Tuesday’s open should gap above Monday afternoon’s 1552.50 highs and extend higher. [/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.