Market Wrap

It cuts both ways… Repeatedly failing probes above the range’s upper-end have found an interest companion, by continually holding probes under the range’s lower-end. And so the rally potential remains alive.

Pattern points… (Setups and technicals)[pay]
Repeatedly probing above 1411.00 without closing above it has been considered to be distribution. Relatively strong hands are using the bounces as opportunities to sell. It has been a relevant level through multiple opens and other windows. Recovering it at Wednesday’s open would have pointed up sharply, but its resistance again held.

Now comes 1408.00. It has been in the process of being tested as support at many more relevant timing window all week. Still being tested. Probed, but not yet recovered — at closes, opens, bias environment exits, etc. Actually, timely recoveries back above 1408.00 would have been considered accumulation, which this is not.

That may suffice for the purpose of temporarily probing back into last Thursday’s range at 1419.00. It could even break higher to 1428.00. Potential for a rally remains alive so long as 1408.00 continues holding tests as support.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The 3-Day Weekend indicator did not trigger. At the very least, the setup’s inputs require probing some prior high or prior low. Wednesday did neither. The 3-Day Weekend indicator could still trigger late by proxy if Thursday’s open were to exceed a prior low or high like 1404.75-1411.00. Meanwhile, Wednesday’s close dropped back to within 1 tick of 1408.00 — still testing it at the close — leaving potential to rally.[/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.

Intraday rallies have been behaving… in an interesting way. It’s not necessarily bearish, not without triggering pent-up selling pressure — and then the behavior would become very bearish. Meanwhile, there may be one more chance to rally before the weekend.

Pattern points… (Setups and technicals)[pay]
Does recent market action look familiar? No? Try turning your monitor upside down. How about now, you see it, right? The last consolidation prior to probing fresh highs last week had repeatedly held dips testing 1393.50-1394.25 support. More recently, intraday rallies have held repeated tests of 1411.00 resistance.

The latest was Tuesday afternoon. The final hour had been exited at 1410.00, under the bias environment’s 1411.00 high, which was under the noon hour’s 1411.25 high. Not a buy signal among them. Trending up to fresh highs through 3:10-3:20 would have sufficed, but its probe was rejected.

1408.00 was still being tested at Tuesday’s close to avoid triggering a new downleg. That could have marginalized buyers through the weekend. But holding 1408.00 support only avoided triggering a new downleg. Recovering 1411.00 through Wednesday’s open may be the only path remaining to give 1419.00 another chance at being tested.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The 3-Day Weekend signal that will trigger at Wednesday’s close. In general, another failed probe above 1411.00 could be very bearish into the weekend. Holding 1408.00 might have been bullish, if not still being tested at Tuesday’s close. Regardless, a valid rally should be obvious sooner rather than later.[/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.

Monday’s open rejected a second chance… at neutralizing the attraction back up to Tuesday’s opening gap. The first chance was Wednesday night. Monday’s second try means that a third had better succeed quickly to avoid launching a multi-session decline.

Pattern points… (Setups and technicals)[pay]
Friday’s close ended the day testing the morning’s 1408.00 high, signaling that buyers gained now traction for their efforts. Monday’s close was also testing 1408.00. Closing under it would have signaled that sellers gained traction for their efforts. It held.

1408.00 had been thoroughly tested Monday morning by the reaction down from 1416.00. There was no bullish reason to revisit it. It wasn’t even likely to offer much if any support. It held.

Closing under 1408.00 would have offered a compelling “hold-short” setup. As you may be aware already, it held. Probing under it overnight could test 1406.00 or 1402.00 and still recover. But opening any lower Tuesday would target fresh lows under 1395.00, and potentially under 1391.50.

Gapping up Tuesday above Monday afternoon’s ~1413.00 high would trigger a “session-long rally” that targeting at least 1419.00. Opening less strongly could still extend higher, but not as reliably.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s econ calendar is relatively busy and high-profile. The GOP convention begins. And a hurricane may be forming in the Gulf. Meanwhile, the pattern has been very flexible, so continue to beware of false starts.[/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.

No Saturday Strategy Session… this weekend. Don’t hesitate to request a stock analysis in the comments section of this blog post.

Pattern points… (Setups and technicals)[pay]
Friday’s buyers were pretty productive after holding 1396.50-1397.50 through the open. The weekend’s impending illiquidity leveraged the sudden lack of selling pressure and recovered 1399.50. That triggered a squeeze to test 1407.00 by 1 point.

As productive as this was, the same setup would have been extremely bullish if its timing had been accelerated by less than hour. Instead, the rally was sponsored by weak hands. Not as weak as initial selling, which held 1396.50-1397.50 through the open. But not accumulative. A running correction that developed around 1403.00 between two surges suggests as much.

So, Friday’s rally was sponsored by weak hands, filling the gap back to Wednesday’s 1411.75 cash session close, without closing above it. In other words, buyers expended a lot of energy just to neutralize an attraction above, without gaining traction for their effort. Despite futures settling at 1410.50, the morning’s 1408.00 high was still being tested within 3 minutes of the cash session close, so its resistance is considered to have held.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Extending Friday’s bounce on Monday would require gapping above 1414.00, the upper-end of the structure that contains Wednesday’s 1411.75 gap. Tuesday’s 1419.00 opening gap would be targeted, and extending above 1420.00-1421.00 would target a brief test of 1428.00. Alternatively, breaking back under 1404.00 through Monday’s open would signal that Friday’s weak-handed buyers were already facing the consequences, putting into play fresh lows.[/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.

Wednesday night’s rally reacted… to its cash session sellers not gaining traction for their efforts. But that only attracted more sellers for Thursday’s open. And they gained traction.

Pattern points… (Setups and technicals)[pay]
Wednesday’s 1404.00 low probed last week’s “lower prior highs.” Thursday’s 1398.00 low did, too. But Wednesday’s low recovered, where Thursday’s low did not. The afternoon’s bounce peaked at 1403.00, then settled back to 1400.00.

It doesn’t preclude another attempt to test Tuesday’s 1419.00 opening gap up — like Wednesday’s 1418.00 tried. Now its test would be much more likely to reverse back down. A rally back into Tuesday’s range should begin by gapping up above Thursday’s 1405.00 noon hour high, preferably recovering 1407.00 through the opening 15 minutes of volatility.

Gapping up would reject Thursday’s close under relevant support. Having just closed under relevant support, the open could resume dropping at an accelerated pace — especially with the weekend’s illiquidity fast-approaching. Absent a gap up or an opening plunge, Friday’s session would be most vulnerable simply to drifting lower into the afternoon, and not to drifting upward.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This being a Friday, the morning’s bias signal is likely to persist through the noon hour… Reminder: This weekend there is NO Saturday Strategy Session. Please request any stock analyses intraday.[/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.