Market Wrap

The post-close Market Wrap walks… through the current market situation comprehensively, and as concisely as possible given the pivotal point where it currently rests. Its recording is linked from the blog’s sidebar, but I’ll cover the central points below.

Pattern points… (Setups and technicals)[pay]
Wednesday’s session offered more evidence that sellers aren’t gaining traction for their effort. It also offered more evidence that buyers weren’t yet exploiting that.

Tuesday’s close under 1341.00-1342.00 prior lows had signaled momentum reversing down. Without a second consecutive lower close Wednesday, it was not confirmed… Tuesday’s 3:10-3:20 setup had identified a momentum low that forced a lower low to recover. Wednesday’s lower-lower low recovered, too… Wednesday’s low fulfilled the minimum 1327.00-1328.00 target put into play by closing Tuesday under 1346.00. The steep reaction up to 1339.50 confirms the pattern is influencing price action.

Wait, there’s more…

1341.25 became “unfinished business above” upon exiting Wednesday morning’s bias environment. Its attraction could help to resume Wednesday afternoon’s recovery attempt… Oh, yeah — volume stinks.

[/pay]What’s Next… (Outlook and opportunities)[pay]
All of which suggests that sellers are not strong hands. And all of which only suggests that buyers are patient. They certainly haven’t yet made their move. Until they do, there is potential for retesting Wednesday’s low to 1326.50 or 1322.00. But any lower through a relevant timing window could steepen the decline slope, instead of ending it.[/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 drop has its choice… of scapegoats: PFG positions being liquidated. German ruling on ESM delayed. CMI warns on earnings. Regardless, the market has been toppy. And now potential to retest last week’s highs is in jeopardy.

Pattern points… (Setups and technicals)[pay]
Friday and Monday’s closes back above 1346.00 had prevented sellers from gaining traction. It also made Tuesday’s open likely to gap up a lot if it were to gap up at all. pattern would also produce a significant morning-long rally. Tuesday’s open did gap up a lot, but that produced a significant session-long decline.

That inversion alone is a concern for the potential to retest last week’s 1369.00 and 1375.00 highs. Now closing under 1346.00 has put into play a test of 1327.00-1328.00 and potentially also 1322.00. And closing under Friday and Monday’s 1341.00-1342.00 lows has signaled momentum reversing down.

A second consecutive close under 1341.00-1342.00 lows — preferably under Tuesday’s 1330.50 low — would confirm momentum has reversed down. Closing back above 1341.00-1342.00 would invalidate Tuesday’s break.

The battle is on.

[/pay]What’s Next… (Outlook and opportunities)[pay]
An interesting setup through 3:10-3:20 Tuesday (described in the Market Wrap recording) suggests that a momentum low formed. Recovering from lower lows Wednesday could trap shorts back above 1335.00. Simply recovering 1341.00-1342.00 would make lower lows unnecessary before attempting again to retest last week’s highs. [/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 week has begun pessimistically… but that’s not necessarily bearish. It can certainly become bearish. But despite spending the entire session in negative territory, the burden of proof is still on sellers.

Pattern points… (Setups and technicals)[pay]
Friday’s 1342.25 low was tested as support through three of Monday’s timing windows. Each test produced a bounce back up to 1346.00-1347.00 — the latest bounce was 1 point higher. Friday’s failure to close under 1346.00 had robbed its sellers of their momentum. Now Monday has, too.

Friday’s cash session close equated to 1349.00, and it was not touched intraday (only futures probed it up to 1349.75). The entire session developed in negative territory. Seems pretty pessimistic, right? Almost.

This all followed probing under Friday’s prior lows, and gapping down. It doesn’t get any more pessimistic, except for actually closing under the morning’s low. This happens to be the most important. So, Monday’s session was “ineffectual pessimism,” vulnerable to resolving up sharply Tuesday.

Monday’s sellers did leave some unfinished business below at 1339.75. Its required test is could happen overnight or Tuesday, and still recover like Friday and Monday. But failing to hold its support would simply point down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Buyers also gained no traction Monday, so extending their afternoon rally would require gapping up Tuesday. Similar to Monday’s opening setup, gapping up at all Tuesday would likely gap up a lot. Just recovering 1350.50 and 1352.00 would make 1358.00 a reality overnight.[/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.

Most of the initial reaction to Friday’s… Employment Situation report was not recovered by the close, despite a late rally. There is still a path higher, but probably only if obvious immediately Monday.

Pattern points… (Setups and technicals)[pay]
Friday’s open and close both were essentially 1349.00. The 9-point rally during the session’s last 90 minutes would seem to be that much more impressive for having retraced all post-open losses. No. Closing above the opening print would have suggested as much. Simply returning to the open does not.

Stopping just short of the retest would have left an attraction above. Closing above the opening range would have put into play a higher objective. But Friday’s close was the worst of both worlds: It expended as much buying pressure as possible without gaining any traction for the effort.

At least the session avoided closing under 1346.00 which would have sealed a top. This alone keeps the door open to retesting last week’s 1369.00 (intraday) and 1375.00 (Globex) highs. But since buyers gained no traction for their late rally Friday, Monday’s open must gap up to avoid an attempt at resuming the decline.

[/pay]What’s Next… (Outlook and opportunities)[pay]
REMINDER: There is no Saturday Strategy Session this weekend. We did discuss the bigger picture during Friday’s Market Wrap. Its recording is linked from the blog’s sidebar. [/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.

Perhaps Thursday’s decline was… only anxiousness ahead of Friday’s Employment Situation report. Last-minute pessimism ahead of a weighty high-profile event is potentially bullish from a contrarian perspective. But only if exploited without delay.

Pattern points… (Setups and technicals)[pay]
Thursday afternoon’s bias environment was exited above the noon hour’s 1365.50 high. But the last hour’s entry was still testing the noon hour’s high as support. Its break would have been bearish.

That made trending much less likely for the balance of the day. But the reversal from the bias environment’s 1368.25 high extended down anyway.  The cash session close was testing the noon hour’s 1362.25 low. Its break earlier would have been very bearish.

Support at 1364.00-1365.00 was never broken through a relevant timing window, so the only way to break lower immediately would be to gap under Thursday’s 1357.00 low. Fresh weekly lows coming out of Friday’s bias timing window would be extremely bearish.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday morning’s 1356.00 bias-down target was not met, but its test is not required. Not requiring a test, testing it anyway at Friday’s open would suggest sellers are taking control. Meanwhile, since Thursday’s close trended down, gapping up above the afternoon bias environment’s 1368.25 high would trigger a session-long 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.