Market Wrap

Thursday afternoon’s repeated tests… of 1452.00 resistance deserved a reward for chipping away at its resistance. Not of 2-3 ticks, but of 2-3 points. In fact, the subsequent peak was 1455.00. Buyers have been rewarded, and they failed to trigger a “hold-long” by closing AT 1454.00 instead of above it. New sponsorship for the recovery had better arrive immediately Friday, or else Thursday’s lows will demand a retest.

Pattern points… (Setups and technicals)[pay]
Attractions below the market at 1447.00-1448.25 had prevented a rally Tuesday and ruined a rally Wednesday. New attractions below the market at 1447.75 and 1443.75 may prevent or ruin a rally Friday, too. Or, a rally may be delayed until either is tested.

Regardless, a rally Friday does not require first testing either 1447.75 or 1443.75. Their attraction(s) below can be neutralized by exiting Friday’s open above 1454.50 which equated to Wednesday’s cash session close. Thursday had that opportunity, so the bullish scenario would not waste time extending above 1457.00, too.

There is plenty of upside if a rally were to  gain traction at Friday’s open. Last Friday’s 1486.00 high still requires a retest. But exiting Friday’s open still in the orbit of 1447.75 and 1443.75 would make their test(s) likely. And failing to hold their support could extend the decline through Monday morning.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Friday’s expiration need not trend at all, even if its open were to gap. Limited volatility through the first hour would warn us of a flat session. I’m not anticipating that, and the alternative to that signal should be a very volatile session.[/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.

Wed-Ex didn’t have an opportunity… to trigger. At the heart of Wednesday’s Expiration Indicator is a probe beyond the recent range. But Wednesday’s session barely touched the two prior ranges’ upper-ends. Overnight action through Thursday’s open could still inform the setup by proxy, which we’ll discuss then. Otherwise, Wed-Ex doesn’t offer any extra clues to bias into and/or out of the weekend.

Pattern points… (Setups and technicals)[pay]
Tuesday’s session was kept in a narrow range, as the attraction to fresh lows inhibited rally efforts. Wednesday’s session did try to rally. Twice. First overnight, and then intraday back up to the overnight highs. Tuesday not rallying is one thing, but Wednesday not extending an actual rally is another.

Could the market still be in the orbit of the 1448.00 area, and its gravitational pull is still inhibiting a rally?

The 1448.00 area remains capable of absorbing and rejecting selling pressing. Getting its test out of the way soon after Thursday’s open — if not already recovering from its test overnight — would still enable a rally back to Friday’s high. Alternatively, gapping up above Wednesday’s 1459.00 highs could break free from the gravitational pull below.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday afternoon’s windows touched, pierced and probed 1458.25 without triggering its signal. Each of those failures alone was bearish. The afternoon was already unlikely to range narrowly, which left only one direction: down. A late sell-off to 1453.00 was just a little too productive too quickly for what was otherwise a compelling “hold-short” through the close setup triggered under 1455.50. But it gets a benefit of the doubt for extending down so long as 1455.50 isn’t recovered.[/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.

Tuesday’s session was stuck in the… much, much like Monday, but a little more volatile. Pre-open action had already made the overnight lows likely to be probed. The morning’s bounce delayed that, and the noon hour’s ranging teased at it. But the session never delivered. Does the likelihood for fresh lows even exist?

Pattern points… (Setups and technicals)[pay]
Pre-open action had already made Tuesday likely to probe under the overnight lows. Did that likelihood have any purpose beyond preventing Tuesday from launching a rally? Or, was unfinished business left outstanding?

Like one sibling taunting the other by only pretending to jab with his finger, the effect can still be pretty annoying. Just ask my sister. A probe of fresh lows could still develop overnight and recover before the open. Any of Tuesday’s timing windows could could have formed the same pattern.

There is no requirement to probe a fresh low before rallying back to retest Friday’s 1468.00 high. But not probing fresh lows first would make 1468.00‘s test that much likely to reverse down quickly. That would still be possible if Wednesday’s open were to recover from testing the 1448.00 area, but at least there would be potential to extend higher. Meanwhile, quite a different world awaits under 1447.00 .

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday of expiration week offers the chance at triggering my Wed-Ex signal. Probing under Tuesday’s low or retesting Friday’s high should offer some predictive insight into whether price action will be biased into and out of the weekend.[/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.

Had Friday’s lows probed as low… as Monday’s lows, then the weekend would have been greeted from sharply negative levels. But the lower low was delayed until Monday, and it was recovered back to Friday’s lows. Can buyers exploit the setup?

Pattern points… (Setups and technicals)[pay]
It took long enough, but Monday morning’s indications for probing under the 1454.00 overnight lows were finally fulfilled during the afternoon bias environment. A morning test could have recovered to renew the rally by then. Instead, the fresh lows extended into the last half-hour.

The 1450.50 low wasn’t breathtakingly removed from the prior range, and it didn’t damage the rally’s chart. Trending down on the Rosh Hashana holiday’s lighter volume wouldn’t have confirmed a deeper dip. And the dip was relatively shallow compared to the Crude Oil plunge on SPR rumors.

When the drop has finished, then overbought RSIs at Friday’s 1468.00 high will want to be retested. The drop may yet need to test fresh lows in the 1448.00 area before ending. Any lower would essentially put into play a complete retracement of Thursday’s FOMC surge. Recovering 1456.00 overnight would be credible for extending higher already.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday’s continued pullback off of Friday’s high is interesting. It plays out the clock on retesting the prior high, which would be very interesting if done on Wednesday. This week’s Wed-Ex (Wednesday Expiration Indicator) would have something to say about that.[/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.

Be prepared for an… early start to this weekend’s Saturday Strategy Session. We’ll begin 30 minutes early at 9:00am ET. And we’ll probably finish within 45 minutes. Be sure not to show-up late if you have stock analysis requests.

Pattern points… (Setups and technicals)[pay]
Friday morning’s opening surge was retraced entirely from its 1468.00 high back down to its 1455.50 opening print. The afternoon’s ultimate low touched the morning’s 1454.25 bias-up signal. That’s a big retracement.

But the morning’s post-open low was pierced by only 1-2 ticks. And negative territory was never attacked, let alone probed. The final hour was entered not by a fresh low, but by a bounce. That’s not strong-handed sellers. But that is a lot of selling pressure to have expended without gaining traction for the effort.

Overbought RSIs at the 1468.00 high require a retest. That’s not the only obstacle to a decline. A new trend high close on a Friday is almost historically impossible to serve as the trend extreme. But Monday’s high can. Not extending down immediately at Monday’s open will likely recover to retest 1468.00, whether by 1-3 ticks or by 3-5 points.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Buyers gained no traction for their efforts Friday, either, since the close was below noon hour range. In fact, buyers were so weak that only a last-minute surge avoided the session closing back under Thursday’s high. Gapping up should be the only way to extend the trend Monday. Otherwise, a retest of 1468.00 would likely hold.[/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.