Market Wrap

If low volume inhibits trending… then why was Monday’s range relatively narrow compared to Friday? Actually, low volume reflects weak hands. So, last week’s buyers were weak hands, and Monday’s sellers were strong hands.

Pattern points… (Setups and technicals)[pay]
Repeatedly bouncing back up to 1402.00 Monday chipped away at its resistance. Combined with absorbing the intraday dip to 1395.00, buyers had earned some probe of fresh session highs. They were rewarded by a last-minute surge up to 1405.00.

Closing in positive territory above 1405.00/1407.00 would have signaled automatically the correction from 1468.00 had ended. Instead, 1405.00 held as resistance. So, putting into play any higher objective would require forming a new accumulation pattern, and triggering it.Buyers still had some influence Monday. Their second consecutive close above 1397.00-1397.75 has marginalized sellers enough that immediately launching a new downleg isn’t likely. A new downleg would require forming a new distribution pattern, and triggering it.

So, trending Tuesday would require a second consecutive close to confirm. Otherwise, a pattern is still forming. But the burden of proof remains on buyers to produce another two consecutive closes above a relevant level. Sellers lost traction long ago, but the door remains open to them regaining it.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Other than an abnormally busy econ calendar, Tuesday has no particular challenge facing it, since there was no unfinished business left outstanding.[/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 rally had developed Wednesday… then would it have been countered already by a new downleg? There’s certainly something to be said for having time to gather sponsorship, which Friday’s shortened session did not. That won’t matter if Monday’s close hasn’t reversed the direction down.

Pattern points… (Setups and technicals)[pay]
Friday’s last intraday post discussed the week’s complete, retracement back to 1397.00-1397.75, whose break had put into play 1348.00. Neither closing above the signal, nor probing 10 points above it intraday, makes it any likelier to extend higher Monday. Extending higher may even be less likely, already having expended so much buying pressure.

A second consecutive higher close Monday would make this rally’s objective new highs, above 1468.00, at least to 1471.25. Closing back under 1397.00-1397.75 would trap Friday’s buyers, and all but signal that momentum had reversed down. Closing in between — above 1397.00-1397.75 but not a fresh high — would still rob buyers of their traction, but allow another buy signal to trigger.

By the way, in case there’s any question, this week’s buyers have been fully rewarded. Monday had closed above the morning and noon hour highs, and each subsequent session had recovered from an intraday or overnight plunge. Friday’s surge did not close high enough to put into play any higher target, and buyers did nothing new to require a further reward.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Eurozone leaders’ pessimistic statements Friday were reminiscent of the rhetoric between Palestinians, Egypt and Israel that had reached its most heated levels only hours before announcing the cease-fire. Following the same “head-fake” template would suggest a resolution to Greece (if not also Spain) this weekend. Sell the news? Perhaps, especially if any initial upside follow-through proved short-lived. No resolution over the weekend would not necessarily be bearish. [/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 patience is a virtue… then why are the rewards all going to the overnight crowd? We waited around all day Wednesday for a breakout to fresh highs targeting 1393.00-1394.50. Essentially, all the market provided for our time was repeated attacks on the 1389.25 pre-open high. Wednesday night’s Globex open was more accommodating.

Pattern points… (Setups and technicals)[pay]
The target was met several minutes after the Globex open, which spiked up almost immediately to within 1 tick of 1393.00. That was tested and probed throughout the night and Thursday morning., up to 1393.75. No reaction ever dipped back down into Wednesday’s range.

Tonight’s open might reject it all, but there is room down to 1386.50 before more than a pullback might be underway. And then there’s room down to 1384.25 before signaling an actual downleg has begun.

Meanwhile, so long as 1388.00 holds as support, more probing into the 1393.00-1394.50 range remains likely. Opening above the range’s upper-end could marginalize sellers through the early close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Although Friday’s session closes early, the Morning Market Tour will be held normally at 8:55am ET. Meanwhile, try not to eat too much… too quickly. Pace yourself![/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 buyers will be rewarded like Monday’s buyers were… then will there be more than a momentary blip-up to fresh highs? Only if Tuesday’s own fresh high was indeed the reward to Monday’s buyers. Otherwise, both sets of buyers still have some change coming.

Pattern points… (Setups and technicals)[pay]
Tuesday ended essentially where it had begun. Where Monday’s buyers had gained traction and deserved to be rewarded, Tuesday’s buyers also earned a reward for absorbing extended overnight selling and deep intraday selling pressures. Tuesday also ended essentially where it had begun, testing 1384.25, which was Monday’s cash session close.

Tuesday did produce fresh highs. But only briefly during the noon hour. That’s hardly a reward for Monday’s buyers. Now, with Thanksgiving’s seasonal bullishness upon us, Wednesday’s session has an opportunity to reward both Monday and Tuesday’s buyers with a bigger morning rally.

In fact, 1384.25 was being tested at least 3 minutes before Tuesday’s cash session close. And then it was recovered, suggesting to hold-long through the close. Back under 1384.25 would introduce too much risk to merit the exposure. Not already extending higher before Wednesday’s open would be suspicious, too.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday afternoon volume tends to evaporate quickly as traders leave early for the Thanksgiving holiday. Volatility tends to go with it, limiting lower-risk trading opportunities. Whatever trending — up, or down — Wednesday’s session intends to accomplish should be accomplished before the afternoon.[/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 rally had included a dip back into Friday’s range… then a more durable upleg would be likely. But this attempt is still on probation, and it has already expended massive amounts of buying pressure. So, even a durable rally would be vulnerable to reacting down off of resistance.

Pattern points… (Setups and technicals)[pay]
Gapping up and extending higher is a pretty reliable clue that a lot of selling pressure was satisfied at the decline’s 1348.00 objective last week. Gapping up 17 points is a pretty reliable clue that there will be follow-through. Gapping up at all one day following a new low is a pretty reliable clue that any follow-through will be temporary.

Not gapping up above a prior high also undermines the rally’s sponsorship. Not that the 1386.00 prior high was nearby. Not at Friday’s close. It’s nearby now, but a lot of buying pressure will have been expended already just to get there. And there’s a lot of room below even if only to correct.

At least Monday’s buying pressure did gain traction for its efforts. The close was above both the morning and noon hour highs. The late 4-point surge did not make the difference. So, Tuesday’s open must gap under Monday afternoon’s 1377.00 low to invalidate Monday’s recovery above its morning and noon hour highs, or else the trend remains up.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The next higher objective put into play above 1386.00 is 1393.00-1394.50. It may as well be considered in-play, so long as Tuesday’s open doesn’t reject Monday’s late surge from 1381.00. Otherwise, at least a deeper pullback would be likely, 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.