Market Wrap

If Wednesday’s action dictated a bearish WedEx indicator… then would that preclude the market from probing fresh highs before Friday? No, but it would make a probe of fresh highs likely to fail. Of course, WedEx wasn’t actively bearish. And the more passively bearish it was Wednesday, the easier it is for Thursday to turn it bullish.

Pattern points… (Setups and technicals)[pay]
Sellers failed again Wednesday morning to gain traction, making a probe of fresh highs increasingly likely. Wednesday afternoon’s rally attempt was so similar to Tuesday that it is surprising they resolved the same way.

Each had recovered from the open’s gap down. Each had tested and held its upside objective (1467.75 and 1468.50, respectively). Each had probed slightly above prior highs. Their similarities gave Wednesday’s attempt an edge, since similar patterns that appear consecutively tend to resolve differently.

But Wednesday’s 4-point reaction down from 1469.00 pulled back from testing prior highs. These repeated probes of resistance are chipping away at it. At least an obligatory higher high remains likely intraday. Regardless of whether it can be maintained.

This week’s WedEx indicator is passively bearish for having rejected a probe above prior highs. That can become a late actively bullish indicator if Thursday’s close were above all prior highs. Extending Wednesday’s last-minute slide to gap under prior lows would make the signal actively bearish. But also late. And late signals are easier to invalidate.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Probing fresh highs Thursday would not be inappropriate for an actively bearish WedEx indicator. Closing higher would be. Closing higher  — above all prior overnight highs up to ~1471.25 — would undermine Wednesday’s passively bearish WedEx, if not make it actively bullish. Reversing back into negative territory from fresh highs overnight could be the most bearish setup.[/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 had been a fresh high… instead of dipping, then a hold-long setup would have triggered. Only that late dip prevented its consideration. That’s because it also prevented a breakout. Apart from that, fresh highs would be credible for extending higher.

Pattern points… (Setups and technicals)[pay]
Were buyers being patient since Friday morning, hovering under the ~1471.25 overnight highs without reversing down? Sellers were not exploiting this hesitation, so they were considered “ineffectual” until proved otherwise.

That proof otherwise needed to be a break lower Tuesday. Any further delay would all but ensure extending the rally. Sellers did break lower Tuesday. But worse than not exploiting hesitant buyers, they did, and they failed.

The reward to invalidating the morning’s late bias-down was to fulfill the no-bias parameter, and to test the 1467.75 bias-up signal. That was fulfilled Tuesday afternoon up to 1468.25. The consequence to not letting (ultimately) sellers gain traction was to attack the ~1471.25 overnight highs, if not also probe higher to test 1474.25.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Back under 1463.50 would start to signal that sellers were attempting again to take control. Meanwhile, higher highs are likely, but not required. And since Tuesday’s probe above Friday and Monday’s highs did not close higher, higher highs are unlikely to trend up into a new upleg. [/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 third time’s a charm… then Tuesday’s market should expand its volatility, if not resume trending. The market is starting to wear out its welcome with this area.

Pattern points… (Setups and technicals)[pay]
For the second consecutive session, fresh highs overnight were not revisited intraday. Price action above 1467.50 both Friday and Monday was limited to pre-open. Post open was spent reacting to initial weakness.

For the third consecutive session, 1467.50 attracted late price action. Its rejection Monday down to 1463.00 was recovered to within 3 ticks of 1467.50. That was almost a third consecutive close there.

For the third consecutive session, closing price action was very much influenced by the rally’s 1464.25-1465.50 target. Both Friday and Monday staged a late effort to rally back above it..

This has not been accumulation. But price action hasn’t been trending downward, either. While a sudden break lower is possible, a sudden break may be the only path lower. Otherwise, there is a vacuum above and price action will try to fill it.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Like Monday’s open, if sellers aren’t in control Tuesday morning, then fresh intraday highs would be likely. Tests of recent overnight highs at ~1471.25 would probably extend to 1471.25, as well. Opening under 1461.00-1462.00 would instead apply new downward pressure..[/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’s target is valid… and holding it as resistance both Thursday and Friday suggests as much, then must a downleg appear without delay? No, and one might not appear at all before a consolidation regroups to launch a new rally leg. All that can be precluded at this point is extending higher without delay, which would be likely to fail.

Pattern points… (Setups and technicals)[pay]
The rally doesn’t have much going for it. Not anymore. There is still no unfinished business above, as has been the case since Thursday’s close. The 1464.25-1465.50 target held again. The overnight new high has no complexity that might make it a “New Globex trend extreme” requiring intraday retest. And not closing at a new trend high Friday removes the downside protection that last Friday’s new high close had enjoyed.

One thing the rally does have going for it is the lack of a downleg. Sellers had an opportunity Friday to start one, and failed. The failure wasn’t very stunning, as failures go. For instance, no rally developed in its place. Anyway, Fridays are difficult to generate sponsorship for trending.

So, the rally’s momentum may be done, but a downleg hasn’t yet started. Until then, the rally may find new momentum, but probably by rejecting a dip. This introduces the caveat that a false break either way is possible — indeed, being a Monday, gapping in one direction often reverses more sharply in the opposite direction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget to join us for the Saturday Strategy Session. Its link is in the blog’s sidebar, and the discussion begins at 9:30am ET. After focusing on the market, you’ll be welcome to request instant analysis of any stock charts currently interesting you.[/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.

The rally intends to end soon… then it should be ending now. Like last week’s signal, new trend high closes tend not to happen on Fridays. That helped to anticipate this week’s dip would be recovered. A new high close must be avoided this Friday for a decline to get underway soon.

Pattern points… (Setups and technicals)
The rally has no unfinished business above. Thursday’s retest of last Friday’s 1463.00 high was all but required, and likely to be probed up to 1464.25-1465.50. Its afternoon retest wasn’t extended in time to put higher requirements into play.

The rally’s momentum is questionable. The afternoon’s retest of the morning’s highs was ongoing into the final hour and through the 3:10-3:20 window. The timing can reflect strong hands’ intentions, and status quo right then was not outright bullish.

The rally’s sponsorship is (feeling) exhausted. Not to be confused with expended, buyers have been doing the heavy lifting. A lot of buying pressure was expended into and out of Thursday morning’s test of 1465.00. The interim dip to 1455.75 was recovered entirely from its morning low.

What’s Next… (Outlook and opportunities)
None of which is bearish, except to undermine the later extension higher up to 1467.25. A new high close on Friday would suggest the same trend protection as last Friday. So if the rally intends to end soon, then it should be ending now. Otherwise, next targeted is 1469.75 and potentially 1474.25, but neither is required.

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.