Market Wrap

Did it, or didn’t it… That was the context for Monday’s session. Last week ended while testing Apr 4-5 highs at 1396.25-1397.50. Immediately resuming the rally or reversing down would be likely to extend in that direction. Gapping open at or under 1396.25 and extending down to 1389.75 suggests that resistance held. It can still be invalidated…

Pattern points… (Setups and technicals)[pay]
Monday morning’s 1390.25 bias-down target was finally fulfilled when the afternoon’s bias environment started lapsing after 2:30. Its test reacted back up into the narrow 1391.25-1393.50 range. The session’s last hour was entered back above the range’s 1391.25 lows.

That was too low and too late to reject the session’s fresh lows. It was not too late to extend higher.

The fresh lows would have been rejected by entering the last hour above 1392.50, or at least recovering it through 3:10-3:20. It wasn’t recovered until the position-squaring window was beginning. The recovery’s sponsorship was suspect.

Regardless of any earlier timing in recovering any lower levels, closing above 1494.50 would have at least robbed the decline of its traction. It was touched to within 1 tick before the cash session close dipped to 1392.50.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Recovering 1396.50 immediately through Tuesday’s open would dismiss the lateness of Monday’s bounce. Opening any lower would likely resume Monday’s decline.[/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 Saturday Strategy Session is linked… from the blog’s sidebar (it’s not held in the normal Chartroom), and it begins at 9:30am ET. We’ll review the market’s bigger picture, and then do an instant analysis for any stock or futures chart requested.

Pattern points… (Setups and technicals)[pay]
It’s official. The bearish trend change that was signaled Apr 9 by closing under 1386.00, has been invalidated by Friday’s second consecutive higher close above 1386.00. Sellers are back at square-one, and retaking control requires triggering a new signal.

Invalidating the trend change does not equate to being a buy signal.

But Friday’s price action came as close as possible to triggering a buy signal. Its 1399.00 cash session close was still testing the 1397.25 high of the Apr 4-5 structure. Since that structure contained the gap that was filled Thursday, closing above its 1397.25 high would create an attraction to the next higher gap outstanding at 1408.00.

Meanwhile, a dip holding 1394.50 as support would still be likely to resolve up. The structure’s 1389.00 lower-end must break to undermine any further recovery potential. Simply extending higher at Monday’s open would signal the rally has resumed.

[/pay]What’s Next… (Outlook and opportunities)[pay]
We could not consider a “hold-long through the close” Friday since the close was under its 1400.75 opening print, after probing fresh highs intraday. Immediate strength would reject Friday’s lower relative close, as if the close were higher. The appropriate behavior would surge, compensating for the delay, if maintained through the opening 15 minutes of volatility. So, almost any opening weakness would suggest a deeper pullback underway, first. [/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 strength was tempered by… Thursday morning’s weakness. That allowed a rally to fresh highs, and a threat to the outstanding trend change signal. It also required very strong selling to develop Friday if the trend change would remain intact…

Pattern points… (Setups and technicals)[pay]
Thursday afternoon’s 1395.75 bias-up target was met. Its relevance was confirmed by an obvious reaction down. Its relevance didn’t end there. Three separate probes of fresh highs each returned back down to 1395.75. The cash session close equated to 1396.00, essentially 1395.75.

Also relevant is what was actually being tested by 1395.75 (see nearby chart): Apr 5’s 1390.25 gap (circled red), and the 1397.25 high (highlighted yellow) in the Apr 4-5 structure (circled red).

Closing above this structure would have reversed momentum up. That recovery is undermined by having probed its upper-end without closing above it. But closing above the structure’s 1397.25 high Friday would still be credible for extending higher.

Filling one outstanding higher gap is normal within the context of a corrective bounce. But there is no bearish reason to fill the next higher gap at 1408.00 (highlighted green). So, closing above the structure’s 1397.25 high Friday would put into play new highs above 1418.00 (circled black).

A second consecutive higher close Friday would also confirm Wednesday’s recovery above 1386.00. That which would neutralize the bearish trend change signaled by originally breaking under 1386.00. Avoiding a higher close Friday would maintain the original bearish trend change signal. But a close under 1386.00 would be preferable, at least for clarity’s sake.

[/pay]What’s Next… (Outlook and opportunities)[pay]
An immediate reversal down probably wouldn’t be sponsored by strong hands, not unless forcible enough to open under a relevant level like Wednesday’s 1387.50 highs, or Thursday’s 1381.00-1383.00 pre/post-open lows. This post-close dive (see nearby chart) on Spain’s downgrade is retesting Thursday afternoon’s 1390.25 bias-up signal as support — that would be too shallow, and back above 1392.00 would suggest a retest of 1395.75 or fresh highs was in-play. [/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.

FOMC days can be… so much fun. Especially when its the Chairman’s quarterly press conference. The bullish environment fostered by AAPL’s earnings the previous evening didn’t hurt matters.

Pattern points… (Setups and technicals)[pay]
Wednesday afternoon’s 1388.25 bias-up target remained in-play, after it was invalidated. That is, the bias environment’s 2:30 exit was probing under the 1383.50 bias-up signal, but it was recovered through 3:00. The burden of proof was on sellers to invalidate it, and they did not, despite trying.

1388.25 was tested to within 3 ticks up to 1387.50, so a downleg could have gained traction. But two more windows for reversing down were ignored.

Testing 1388.25 overnight, and only 1388.25, would be noise. It would not create a “new Globex trend extreme” that might require being retested intraday. Any price action that has any complexity above Wednesday’s 1387.50 highs would require an intraday retest.

Meanwhile, Wednesday’s cash session close was still in the process of testing the 1386.00 area. Its break a couple of weeks ago triggered a trend change. Its recovery by two consecutive higher closes would invalidate or terminate the bearish signal. Wednesday was not the first of those two days.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Reacting down overnight under 1383.50 and 1381.25 would be likely to trend down Thursday morning. This is regardless of whether 1388.25 were tested first. Regardless, the rally is not precluded from extending above 1388.25, but the burden of proof is on 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.

Better late than never?… Earlier would have been better. A late-afternoon buy signal was triggered but it wasn’t very productive through the cash session close. Post-close action did surge to attack the morning’s highs, and the reaction to AAPL’s earnings spiked up much higher.

Pattern points… (Setups and technicals)[pay]
The reaction down from fulfilling the morning’s 1371.00 bias-up target triggered a sell signal at 1368.75. Among its objectives, 1363.25-1363.50 was met on oversold RSIs while the bias environment started lapsing. A perfect storm, at least for a corrective bounce.

Its reaction triggered a buy signal at 1366.00. Perhaps hampered by anxiousness ahead of AAPL’s post-close earnings, the Tuesday’s closing action finally surged to attack 1371.00. Its reaction to AAPL’s earnings spiked up to 1376.00.

Unless sellers had regained control at Tuesday’s close, the next higher objective was to fill the gap back to Friday’s 1374.25/1375.25 close(s) — probably up to 1377.00. That has now been tested to within 1 tick. If AAPL has a delayed negative reaction (a’ la GOOG), then there would be no unfinished business above.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Now, a pullback has room down to 1371.50-1373.00 before sellers would regain control. Higher potential resistance is 1379.25, 1381.25 and 1384.50.  [/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.