Market Wrap

Wednesday’s sellers didn’t do… anything they weren’t supposed to. Wednesday’s buyers didn’t do everything they could have. Intraday selling was possible, but not likely to gain traction, and it did not. Intraday buying had potential to retrace Tuesday’s drop, but didn’t. Thursday’s session will be greeted with the same posture.

Pattern points… (Setups and technicals)[pay]
Sellers had expended a lot of energy during Tuesday’s drop to 1408.00 that was never refueled. Patient buyers had limited there efforts to only bounce into the close. That did not prevent probing fresh lows, but it suggested that any such probe would not extend.

Wednesday’s probes of fresh lows did not extend. The open’s dip to 1406.00 bounced up to 1411.25. The afternoon’s dip to 1404.25 recovered up to 1414.25. Its reaction down tested and held 1411.25 as support through Wednesday’s last 45 minutes.

On a smaller scale, Tuesday and Wednesday’s dips resemble the prior consolidation that formed while testing 1393.50-1394.25 support. So long as 1407.00 isn’t broken through a relevant timing window, Tuesday and Wednesday’s dips should also launch a rally effort.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The session closed unchanged. That never qualifies for an overnight position. But extending any higher overnight would likely be attracted higher by the gap back to Tuesday’s 1419.00 open. Dipping under 1410.75 and 1408.75 would become vulnerable to attacking 1403.00 again. [/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.

One day after bemoaning… August’s narrow intraday ranging, the market provides a very satisfying intraday slide, with plenty of warning signs. Here’s another: Just as August’s rally was masking its narrow intraday ranges, Tuesday’s slide may be masking the rally.

Pattern points… (Setups and technicals)[pay]
In other words, the burden of proof is still on sellers. Tuesday’s slide left outstanding the open’s gap up to 1419.00 to attract price higher. Extending the drop first would not be considered durable top so long as the gap remained unfilled.

Meanwhile, Tuesday’s sellers expended a lot of energy intraday without any refueling bounce. And buyers didn’t waste energy trying to bounce at the close, which settled just at or under the prior three sessions’ closes. A retest of 1419.00 could be done much sooner rather than later.

The drop is vulnerable to extending down for the same reason that retesting 1419.00 could form a durable top. It originated from a relevant level at the morning’s 1425.00 renewed bias-up target. Tuesday’s reaction down ON NO NEWS is very much in-line with the thin air that was expected up here. And the intraday reversal down was correlated to a downgrade in AAPL. A stock. One stock. Not a good sign.

[/pay]What’s Next… (Outlook and opportunities)[pay]
We began discussing the likelihood for the recent basing at 1393.50-1394.25 support to launch a very brief final thrust. The pattern had already entered a “shark stage” by mid-morning, and the shark had paused upon exiting the bias environment. Shark pausing, thin air, topping… Just beware of sudden downside moves. [/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.

Exiting the bias environment above… the noon hour’s high, instead of still testing it, would have laid the groundwork for a last hour surge. Extending higher into the final hour or through the 3:10-3:20 timing window would have confirmed, but the final hour was entered under both. And 3:10-3:20 did nothing. So, the last hour ranged narrowly.

Pattern points… (Setups and technicals)[pay]
While the resulting signal can be a very useful warning against further trending attempts, trending without a signal would have been acceptable. Instead, the narrow ranging persisted through the close.

The bullish Wednesday Expiration Indicator may have been influential Monday in marginalizing sellers at the open by recovering 1413.75. That didn’t prevent lower lows, it only prevented lower lows from gaining traction at the 1410.25 bias-down signal.

All of the morning’s dip was recovered back to the open’s 1415.00 high, but not into positive territory. A hold-long could not be considered since 1415.00 was still being tested at the close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Buyers have yet to be rewarded for absorbing sellers. That remains likely, and likely Tuesday, and likely to test 1420.00-1421.25. Monday’s close was too shallow to ensure any further upside, or to prevent a detour down. But if sellers don’t control Tuesday’s open, then fresh highs remain likely next. [/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.

Join me for the… Saturday Strategy Session. Bring your stock requests (there’s not session next week) and we’ll also talk about this week’s new highs.

Pattern points… (Setups and technicals)[pay]
The passively bullish Wednesday Expiration Indicator had held price aloft Friday afternoon, but no timing window signaled trending up. Even the shallowest upward bias would still fulfill the signal. A late surge removed any doubt that the signal was influential, but that was unnecessary.

Having fulfilled the signal Friday in the least possible way, Monday morning should compensate for the delay. Even if the open were to gap down, the morning’s post-open action should be biased upward.

There was no second consecutive higher close Friday to confirm Thursday’s close above 1407.00. Friday’s closing surge up to 1416.75 was still testing Thursday’s 1415.50 highs. Fresh highs Monday are possible, but not required and vulnerable to being reversed back down.

Fresh highs would target 1419.00 and 1421.25. Any downdraft for whatever reason — whether in reaction to fresh highs, or just an overnight drop that produces a gap down — could target 1403.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
It’s interesting that the Friday’s last-minute surge neutralized the overbought RSIs at the morning’s pre-open high. The retest was not required, but the retest held. And a higher target put into play at Thursday’s close was not confirmed. None of which is a sell signal, but all of which does make the market vulnerable to its trend reversing down.[/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.

Having fulfilled the objective above… at 1407.00, Thursday morning could have inserted a corrective dip. After all, Wednesday’s Expiration Indicator was bullish enough to all but ensure a recovery up to 1412.00. In fact, there was a dip, and it was recovered…

Pattern points… (Setups and technicals)[pay]
…The dip, however, was much shallower and recovered much earlier than expected. The opening dip had potential to at least 1399.50 but recovered from 1401.75. The recovery was higher than it needed to be — up to 1415.50 — but the cash session close pulled back to 1412.00.

In any case, 1407.00 was recovered through the close to put into play 1428.00. A second consecutive higher close Friday would confirm. Not confirming would not necessarily signal momentum reversing down.

Meanwhile, an overnight probe above Thursday’s 1415.50 high might stretch the rubber band a little too tightly, and launch a drop back down to Wednesday’s “lower prior highs” at 1404.50. Dipping first could bottom from 1406.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
If the bullish Wednesday Expiration Indicator intends to influence Friday afternoon, then an opening dip throughout the morning could test 1404.50-1406.00. Extending higher immediately could extend higher relentlessly through the noon hour, and then only firm into 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.