Market Wrap

If expiration is already influential… then is it bullish that tests of support are recovering, even though their recoveries to resistance are not?

Pattern points… (Setups and technicals)[pay]
Like the WedEx signal on (Wednesday), Thursday’s probe under 1515.00 support was recovered. Like WedEx, it was recovered back to prior highs but no higher, at least not through the close. That’s why WedEx itself was only passively bullish. Only holding another test of support is just more of the same. Thursday’s open did fail to recover 1515.00, so expiration isn’t immune from trending down anyway.

I was willing to give the rally every benefit of the doubt for extending, so long as 1518.25 held as support. It did, but not without behaving poorly during Thursday’s last hour. Timing windows failed to gain traction as fresh highs failed to extend higher. Now I’m willing to give the rally every benefit of the doubt if it is underway through Friday’s open.

Because Thursday afternoon’s pattern was likely to trend into the close, but didn’t, Friday’s open is likely to trend without delay. So, rather than patiently monitor Friday’s open waiting for a setup, any early signal would be credible for extending through the opening 15 minutes of volatility. If that’s upward, then WedEx could reinforce a squeeze into the weekend to 1533.00. Otherwise, down might know where to stop.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The likelihood for immediate trending Friday is doubly interesting. Trending through the opening 15 minutes of expiration tends also to entrench that trend through the close. Since volume tends to evaporate ahead of a 3-day holiday weekend, expiration’s trend would be even more controlling. [/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 you’re only now thinking of shopping for Valentine’s Day… then you’re too late. Almost. If the market is intending to reverse down into the weekend, then it is not too late. Yet.

Pattern points… (Setups and technicals)[pay]
Wednesday afternoon’s drop exited the no-bias environment under the noon hour’s 1515.75 low. And the final hour was entered under the bias environment’s 1514.75 low. That meant sellers were in control — not necessarily that a downleg was extending, only that a bounce would be controlled by sellers. In fact, a bounce from 1513.00 barely missed touching a buy signal 3 points higher at 1515.75 before the 3:10-3:20 timing window lapsed.

A later bounce extended up to 1518.00. If sellers were in control of it, then Thursday’s open should resume the decline. The bounce peaked before retracing Wednesday’s last downleg, which is as high as it could get while still being considered noise. And it stopped short of recovering Tuesday’s 1519.00 high. Having rejected the morning’s new high, at least buyers were prevented from regaining traction.

But there is also the WedEx (Wednesday Expiration Indicator). Rejecting the probe above only Tuesday’s high isn’t enough for this indicator to be bearish. And recovering from an intraday probe under “lower prior highs” at 1515.00 “lower prior highs” is passively bullish. The signal would benefit from clarity offered by Thursday’s open’s trending or gapping through a prior high or low, 1511.00-1519.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Since last Friday’s “breakout” that wasn’t, price has only drifted higher instead of trending. That’s the consequence of not gaining traction, but extending higher anyway. Looking back at the numerous starts and stops and reversals, all within narrow intraday ranges, should be self-explanatory. This situation can persist indefinitely, extending up to 1533.00 without ever putting it into play. This sort of behavior is endemic of late, late, late stage trending. The trend can be renewed by taking the inevitable plunge, first. [/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’s close was no less of a breakout than Friday’s… then does that assure the rally extending higher still? No, because it was no more of a breakout, either. Neither one was optimal, but neither one is a sell signal. One difference, though — expiration is almost just hours away.

Pattern points… (Setups and technicals)[pay]
Tuesday afternoon’s 1520.25 bias-up target was left outstanding. It was attacked up to 1519.00, itself a relevant level that was likely to be visited upon retesting 1517.00. But the reaction down held above prior highs and prior lows through almost all remaining relevant timing windows.

The final hour fluctuated between the morning’s ~1516.00 highs as support and the bias environment’s 1516.50 low as resistance. The non-committal selling pressure isn’t anything new for the recent ranging. The fluctuation’s touch of 1515.00 reacted up to 1517.00 while RSI seemed not to notice.

1515.00 was the prior intraday high, and Tuesday’s last half-hour dipped to touch it. That undermines the close above it, which was only 1 point anyway. Similar behavior Friday has since restrained the rally — it didn’t end the rally, but it prevented any breakout-type price action. Similarly, the rally may yet extend, perhaps to its next higher objective at 1533.00, but only by default since sellers haven’t exploited the sluggish gains.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The Wednesday Expiration Indicator now comes into play. Closing positive would be a bullish bias. Regardless, possibly the last opportunity for a bearish bias would be to close Wednesday under 1510.00.[/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 Monday’s ranging around Friday’s close isn’t bullish… then does that make it bearish by default? No, and it doesn’t make reversing down any easier. But it does require the next credible trending attempt to have some very specific behaviors.

Pattern points… (Setups and technicals)[pay]
Friday’s “breakout” is dead. Its late dip back to prior highs already made it suspicious. Closing higher Monday would have been even more than suspicious, after dipping intraday back under prior highs. Monday’s session didn’t close higher, which is worse.

Closing above 1513.50 was the minimum requirement to even consider whether a rally was emerging. Touching 1515.00 Monday afternoon without closing above it or 1513.50 was even less bullish. Futures dipped to 1512.75 at the close.

Contracting volume on Mondays makes it difficult to confirm Friday breakouts. Monday’s contracting volume would have made it difficult to confirm a reversal signal. Any attempt to extend down must now be accompanied by sharply expanding volume to be credible, instead of waiting until a prior lows is broken.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Regardless of so many potentially bullish elements being undermined — those few described above, and many more discussed since Friday’s close — momentum has not signaled it is reversing down. Still not rejecting  new highs makes the pattern more vulnerable to extending higher. Meanwhile, although the 1517.00 overnight high doesn’t require a retest since it wasn’t rejected deeply enough or for long enough, not immediately extending down Wednesday would make its retest likely anyway.[/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 pop-and-stop “breakout” was held back by unusual illiquidity… then Monday’s open should compensate for the delay by immediately extending higher aggressively. No compensation, no delay. And the rally had better find some other reason to justify its awkward pause.

Pattern points… (Setups and technicals)[pay]
The rally’s 1503.00 target was met two Tuesday’s ago. We always knew there was room for noise around it up to 1512.75. It was finally tested Friday, the reward to buyers for having absorbed several sell-offs in the prior two sessions.

Testing 1512.75 proved to be the worst of two worlds for trying to extend the rally’s momentum into next week. Despite testing it almost immediately Friday morning, it held through the close (at it, actually). The other “worst” was that 1512.75 served as the mid-point to post-open narrow ranging — no intraday dips refueled buyers. Closing above it would have signaled another rally leg underway.

The new trend extreme close on a Friday does threaten to further entrench the rally, and undermine any pullback prior to a fresh high close. But that is achievement is undermined by the last half-hour’s dip touching the 1511.00 “lower prior high,” whose reaction only remained within the range.

Noise range and trend extreme aside, Friday’s new high close is a breakout, which a second consecutive higher close would confirm. Unfortunately, Mondays rarely confirm Friday breakouts.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Perhaps Friday’s opening surge went flat for the day because of the session’s unusual illiquidity caused by the East Coast’s impending excess liquidity. That bullish pattern would demand compensating for the delay Monday by immediately extending higher aggressively. Any shallower strength, or drop, would mean there was no bullish reason for a delay, so there really wasn’t a delay. If the breakout were confirmed, then 1512.75‘s noise range would be breaking to put into play 1533.00 and potentially 1577.00. [/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.