Market Wrap

HAVE A SAFE AND HAPPY 4TH! 

Pattern points… (Setups and technicals)[pay]
Abbreviated sessions on a holiday-shortened week — a truncated week, no less — do not inform the bigger picture. That does not make irrelevant that buyers once again expended enough energy to fulfill an objective without putting a higher objective into play.

Tuesday morning’s 1364.00-1365.00 objective offered resistance that formed a consolidation. A singular probe above it was retraced fully back down to 1364.00-1365.00. A late bounce was only noise, having remained under the 1369.50 interim high.

So, 1364.00-1365.00 was still being tested at the close. Similarly, Friday’s close was still testing its 1357.00 target, and Monday’s close was still testing its 1359.75 limit. This pattern can persist indefinitely, but it is a day-to-day affair that eventually discovers all buying pressure expended and no traction gained to absorb a reversal.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Globex trades normally from 6pm ET to 11:30am. [/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 was essentially an… “inside day.” As such, there is not much to be learned from it. In fact, it reveals nothing that was not already known. One opportunity for Tuesday can be defined, but it was not triggered…

Pattern points… (Setups and technicals)[pay]
Like Friday’s closing price action, Monday’s cash session also trended up to 1357.00-1359.75. And no higher. Like Friday, buyers expended all available buying pressure without gaining any traction for the effort.

Normally, like Friday, the pattern is more vulnerable to retracing all of its last half-hour surge from 1354.25. Gapping down under the bias environment’s 1353.25 low would trigger a session-long decline. And since Monday morning tested the 1350.00 origin of Friday’s last-minute surge without it being required — chipping away at its support — a downleg could test 1336.50 or 1327.50.

Not likely. Possible with the right open, but not likely.

Meanwhile, Tuesday’s low-volume environment could enable Monday afternoon’s rally to extend higher. It enabled Monday’s recovery from 1350.00. Sunday night’s 1362.25 high could be retested by the same sponsorship.

[/pay]What’s Next… (Outlook and opportunities)[pay]
No new objective was put into play by Monday’s price action. This makes Tuesday’s abbreviated session unlikely to trend if it is not trending at the open. It remains vulnerable to reacting to news, but even such a reaction would be vulnerable to reversing abruptly. [/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.

SATURDAY STRATEGY SESSION… Next week’s is only tentatively scheduled. So be sure to attend tomorrow if you have stock requests requiring extra attention. Oh, and we’ll probably talk about the market, too.

Pattern points… (Setups and technicals)[pay]
A perfect storm kept S&Ps trending upward throughout Friday. Several perfect storms, actually.

Technicals — Thursday’s sellers had accelerated the expected pullback, and were satisfied at its 1306.50 target. The close recovered back above its morning low to prevent sellers from gaining traction. Then the overnight dip held its 1316.00 pullback limit. …

Mechanicals — End-o’quarter portfolio window dressing brought money off the sidelines. Fridays are already nearly impossible to reverse their initial trending. And having trended up to fresh highs, the position-squaring window produced a short-squeeze…

Fundamentals — Italy, Spain and Germany…

That last-minute short-squeeze was signaled above 1351.75, after a corrective dip triggered under 1351.50 fell only 6 ticks. The cash session close barely touched 1357.00 to fulfill the required retest of the prior week’s overbought RSIs. A post-close spike up touched 1359.50.

1359.75 was likely to be touched while retesting the prior high. Coming within 1 tick will suffice as much as did Thursday’s 1306.50 low. There was no hold-long or hold-short through Friday’s close. If anything, the pattern is more vulnerable to retracing all of its last half-hour surge from 1350.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
It is silly to try stepping in front of a freight train barreling down the tracks, even if you think it is out of coal. There is still room to probe higher at 1364.00. If 1357.00 were going to be rejected, then it should be obvious by Monday afternoon. Otherwise, there is limited time to reverse down before Wednesday’s holiday, a “mechanical” influence that can marginalize sellers.[/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.

Did Thursday morning’s ruling… on the Patient Protective Care and Affordable Cost Act (PPCACA — I might have that wrong) interfere with the pullback’s timing? If so, then Friday could be very bullish.

Pattern points… (Setups and technicals)[pay]
1323.00 needed to hold as support through Thursday’s open to maintain the rally’s near-term potential. That was the caveat at Wednesday’s close. By Thursday’s open 1316.00 was struggling to hold as support. It did not.

After dropping intraday to 1306.75, a 16-point surge tested 1323.00 — which held as resistance through the close. And that was still negative territory. A lot of buying pressure was expended just to test Wednesday afternoon’s “higher prior lows.”

That doesn’t preclude a bigger bounce, since sellers don’t gain traction after closing above the morning’s highs. And the expected Thursday afternoon / Friday morning corrective dip may have been accelerated into Thursday morning, due to the morning’s news. Also, the 1306.75 low essentially satisfied the 1306.50 target.

Nevertheless, there is potential for a corrective dip to test 1316.00. It isn’t required, but can be done Thursday night to already recover at Friday’s open. Regardless, Friday’s open can already be attacking or probing Wednesday’s 1328.00 highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Failing to contain an overnight pullback, or simply opening weaker Friday, could resume Thursday morning’s decline. This close to the weekend would be a very dangerous time to still be probing support.[/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 premise going into… Tuesday morning’s sell-off was that its low would launch a multi-session rally. Wherever its low, the recovery should have been obvious Tuesday, no later than Wednesday. Its ultimate objective would be to probe last week’s high. So far, so good…

Pattern points… (Setups and technicals)[pay]
Tuesday morning’s reaction up from meeting its 1303.25 target started making the rally obvious. Wednesday morning’s surge through 1318.00 to 1326.00 did, too.

Two concerns, in reverse chronological order, are Wednesday’s late high and Tuesday’s low.

– Wednesday’s late high above 1328.00 fulfilled the minimum objective of the last hour’s 1324.00 buy signal. And then cratered. Not back under a relevant low — in fact, the last leg was retraced no deeper than 61.8%. But it closed back at or under the morning’s 1326.00 high, despite having probed above it twice intraday.

– Tuesday’s low was above Monday’s low, so this continues to be a tentative rally. Except for overnight, and only overnight, a pullback under 1323.00 could undo any traction gained since Tuesday’s low.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Despite being only a temporary rally, albeit targeting a probe above last week’s 1357.00 high, it should extend higher through Thursday morning (if not already higher Wednesday night) before the next significant pullback potential Thursday afternoon and/or Friday morning.[/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.