Market Wrap

Sellers had an opportunity Tuesday morning… to capitalize on having absorbed Sunday night’s buyers. To capitalize on having retraced back to Friday’s lows. To reverse momentum down. They tried, but failed, and the balance of the session rallied to a new recovery high close…

Pattern points… (Setups and technicals)[pay]
Tuesday’s last hour was entered under the bias environment’s 1312.25 high, which was exited under the noon hour’s high, also 1312.25. Strong hands were not the sponsors of the last half-hour’s breakout to 1317.50 and then on to 1320.50.

And as noted Tuesday morning, there was all sorts of resistance from 1311.00 up to 1317.00. That resistance was tested, and held — through the cash session close.

Closing above the session’s prior intraday highs still gained traction. That makes some higher high likely Wednesday — not simply noise, but an actual trending effort. Closing under 1314.00 would have made higher highs unlikely, but now an early pullback (or overnight) could test 1311.00-1313.00 before making a recovery unlikely.

Since Tuesday’s closing action trended up, gapping open under the afternoon’s 1308.25 bias environment low would trigger a session-long decline. Otherwise, the gap back to Monday’s 1339.50 open will try to attract price higher Wednesday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Here come the economic reports, the week’s first data of consequence. Momentum may help to absorb it, but that momentum may be sorely missed when Thursday’s heavier calendar hits.[/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.

Spain’s bailout fixed a… problem that had never been announced, not during the week. It had only been denied. So, Sunday night’s positive reaction was not really a reaction, but an action, and there was no basis for that. Friday’s intraday recovery was similar, and now it is in jeopardy.

Pattern points… (Setups and technicals)[pay]
Friday’s delay in recovering above 1305.00 meant its sponsorship was weak hands. Its complete retracement Monday proves that. Friday’s opening dip holding 1302.00 meant its sellers were weak hands. Monday’s complete retracement gives stronger sellers a chance to regain control.

There really is no bullish reason to be revisiting 1302.00, not after Friday’s test launched a rally above Thursday’s prior highs. The reversal down is likely to continue.

Another detour up would be considered back above 1311.00, targeting 1329.50‘s retest. Otherwise, Monday’s reversal already put into play 1292.00, whose break would target 1280.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The last major downleg eventually entered a period of “hope springs eternal” rallies — very productive, albeit temporary bounces, that didn’t take very long resolving down aggressively. Unless Tuesday were to recover fresh highs, all bounces will be assumed as temporary.[/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 President’s press conference was… poorly timed. At least, for our purposes of the bias parameter. It interfered with triggering a buy signal. More so, the press conference’s timing interfered with the intraday recovery being sponsored by strong hands. Sellers may not be absorbed if they appear Monday morning.

Pattern points… (Setups and technicals)[pay]
The week will be greeted with good news/bad news: The Spanish situation is being resolved. That’s it. A problem that creeped into the headlines while all eyes were focused on Greece, a problem that has been denied as late as Thursday, was suddenly resolved while the markets were closed.

The weekend’s bailout (Europe’s latest, and Spain’s first) has had an effect.. Friday’s cash session closed at 1318.50, and futures had extended to 1323.00. Sunday night’s open gapped up to 1337.00 and tested 1342.00.

Without Spain’s problem ever really affecting charts negatively, the problem’s resolution isn’t off-setting much. It deserves a round of applause, but not a standing ovation. That’s probably why the gap up 7 hours ago has not extended. Higher highs could still be probed, so long as Monday’s open isn’t back within Friday’s range.

[/pay]What’s Next… (Outlook and opportunities)[pay]
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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.

Thursday’s pre-open surge seemed… more euphoric than fantastic. The knee-jerk reaction to China’s rate cut was overly-optimistic. I likened it before the open to the market’s peak on Bin Laden’s killing. Its reaction was retraced entirely, but not yet rejected.

Pattern points… (Setups and technicals)[pay]
I’m assuming the pre-open swell of price action is why SEP futures traded relatively thinly, compared to prior front-month rollovers. JUN opened a lot of new positions before the open that otherwise would have been opened in SEP intraday.

Those are weak-handed buyers. So, much of Thursday’s session’s selling pressure might have been selling JUN without rolling forward to SEP. Awkward.

Will Friday’s price action simply pick-up where Thursday’s close left off, rejecting all of the gains above Wednesday’s mid-day high? Wednesday’s close above 1305.00 basis Sep (1312.00 basis Jun) had put into play 1311.00-1312.00 (1318.00-1319.00 Jun). Although exceeded intraday, its resistance held through Thursday’s close, thanks to the late 10-point plunge. Extending down through 1302.00 (1309.00 Jun) could still signal momentum reversing down.

Or, will Friday’s price action try to duplicate Thursday’s initial rally, whether or not the second effort gains more traction? Gaps up above prior highs tend to be filled, such as Thursday’s 1322.25 (1328.75 Jun) opening print. While 1302.00 (1309.00 Jun) below is likely to be tested, it’s not required, so it wouldn’t be “unfinished business below” that prevents a rally — its test could even be neutralized overnight and recovered before Friday’s open.

Thursday’s high signaled a peak by only probing 1322.00-1324.00 (1329.00-1331.00). Its retest Friday could be more thorough, and still not be bullish if not recovered through a relevant timing window. But few attractions above could be expected to absorb an early bias-down that trends down through the morning.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Start making plans now for Saturday’s Strategy Session. It starts at 9:30am ET, 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.

The corrective bounce potential… were tested at Wednesday at 1309.00 and 1312.00. Ultimately, they were exceeded through the close. That doesn’t mean the rally is not a correction. But it does mean the correction hasn’t ended.

Pattern points… (Setups and technicals)[pay]
Buyers didn’t lose traction through Wednesday afternoon. After probing under the noon hour’s 1307.50 low, the bias environment was exited back within the noon hour’s  range. It’s not bullish, but it it reflects sellers failing to retake control.

Then the bias environment’s 1309.00 high was still being overlapped into the session’s last hour, instead of being exceeded. While that’s not bearish, and it wasn’t definitively bullish.

New trending was likely to be attempted during the position-squaring window. It was likely to be attempted at the window’s beginning, but a surge 5 minutes later still gained a quick 7-1/2 points to 1315.00. The delay is not bullish. And 7-1/2 points is not bearish.

This is an example of, “the trend is your friend.” But timing can come between friends. So, although closing above 1312.00 has put into play 1318.00-1319.00, the timing reasons described above prevented considering it for holding long through the close. Its test is likely so long as pullbacks hold any test of 1310.00-1311.00. Back under 1309.00 would undermine Wednesday’s late surge. And opening under 1305.00 would trigger a session-long decline.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Having been marginalized Tuesday afternoon, there was a window available for sellers to retake control Wednesday. They did not. They didn’t even try — the afternoon ranging was pressured by weak-handed sellers. When sellers trigger their next sell signal (assuming that they ever do again), the result could be very productive. [/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.