Market Wrap

Friday’s sellers all but disappeared… by Sunday night. After retracing all of Monday’s bounce, it would seem that they have returned — and they brought friends.

Pattern points… (Setups and technicals)[pay]
Monday’s bounce was always about refueling sellers. It was unknown whether its peak would wait until Tuesday. We still don’t know, despite the last hour’s 8-1/2 point dive from 1382.75 down to 1374.25.

We don’t know, because of one of the late decline’s main causes, itself. That is the attraction back to unchanged at Friday’s 1375.00 Globex close.

Several of the first hour’s checkpoints each returned to 1375.00. The morning was exited back at 1375.00. So it should not be surprising that once the afternoon’s 1382.25 bias-up target was met, 1375.00 attracted price down to it again.

1375.00 wasn’t revisited until after the cash session close, but a lot of selling pressure was expended just to attack it. The drop doesn’t need a fresh low to resume — a sell signal already triggered at 1380.50. But 1380.50 could be retested first.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday’s close was under March 29’s 1386.25 prior low. It was the first close under a prior low since March 6. Not recovering 1386.25 Tuesday would confirm the trend has reversed down. Closing Tuesday at fresh lows would be optimal confirmation. Recovering instead would all but ensure resuming the rally to new 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.

Good Friday, Happy Easter, and Happy Passover… Best wishes to you this weekend!

Pattern points… (Setups and technicals)[pay]
It’s difficult to trend on Fridays, especially on Friday afternoons. That is just as applicable when Thursday is the week’s last trading day. And more so ahead of a holiday, and ahead of a high-profile economic report. Check, check, and check.

Wednesday’s bearish three-day weekend indicator tried to stir the pot with an overnight 14-point plunge to 1384.00. But a lot of buying pressure was expended in completely retracing it through the morning. And a lot of buying pressure was satisfied in fulfilling the retracement’s 1395.50 objective.

There’s more, but closing unchanged around 1393.00 on the day underscores it all. This market is already positioned for the news.

Other than Wednesday’s indicator, the only new bearish price action came 3-5 minutes prior to the Thursday’s cash session close. It was spent ranging at or under 1393.75 whose recovery earlier would have triggered a rally into the close. Instead, buyers spun their wheels there, gaining no traction for their efforts.

This setup’s bearishness seemed to play itself out when futures plunged back toward the afternoon’s 1389.50 low. Regardless, the Employment Situation report’s reaction will be interesting, and informative, but not predictive — not when allowed only 45 minutes to react ahead of 2-1/2 days of illiquidity.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This being a holiday weekend, there is no Saturday Strategy Session.[/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 Wednesday afternoon’s bounce… look familiar? In some very important ways, it was no different from Tuesday’s late bounce. Substantial, but still too shallow to reverse momentum up…

Pattern points… (Setups and technicals)[pay]
Wednesday’s open gapped under Tuesday afternoon’s low, after Tuesday’s close had trended up. These are the three elements to form a “session-long decline.” Typically, the setup prints a new low during the session’s last hour. Wednesday did not.

Since the setup was not invalidated, its new low remains outstanding. And delaying it until the following day tends to be fulfill it with a vengeance — steeper, more substantial, but at least fulfilling its 1384.50 objective and potentially 1379.50. Opening under 1387.75 could see that vengeance delivered on steroids.

The last opportunity to invalidate the setup Wednesday would have been to close above the morning’s 1398.50 high. Now the next opportunity would be to gap up above 1400.00-1401.50, preferably after probing above it overnight. The minimum objective would fill the gap back to Tuesday’s 1408.25 close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping up above 1400.00-1401.50 would also invalidate Wednesday’s 3-day weekend indicator. Otherwise, the close under two prior sessions’ lows is actively bearish. Thursday afternoon and Monday morning are likely to trend 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.

Tuesday morning’s chance to… retest Monday’s highs was undermined by the same sort of problem that created Monday’s unfinished business — an unfulfilled bias-up target. Tuesday’s was not required, so a recovery now could be that much more powerful.

Pattern points… (Setups and technicals)[pay]
Tuesday’s FOMC reaction from 1409.50 down to 1400.50 reacted up to 1405.00. Its retest was expected to be an “inflection point,” either plummeting lower or else reacting much more sharply. And its retest was allowed room down to 1399.75.

1399.75‘s test did react more sharply, to 1406.50 and then to 1409.00. The entire FOMC-plunge was retraced. But that wasn’t enough.

Just as 1410.00 needed to hold Tuesday’s open to maintain potential to retest Monday’s highs, closing Tuesday under 1410.00 has made the market vulnerable to trending down Wednesday. By the same token, gapping open Wednesday back above 1410.00 would reinstate potential to retest Monday’s highs.

And not just above 1410.00, but above 1412.50 — at least through the opening 15 minutes of volatility. Buyers did not gain traction for their late effort, so they can extend higher Wednesday only by gapping up.

Initial weakness Wednesday would have room down to 1403.50-1405.00 before gaining traction for a more substantial decline, and preventing a recovery attempt from being productive.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The three-day holiday indicator may trigger at Wednesday’s close. If it does trigger, its impact is likely to be immediate since Friday is a holiday.[/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’s open was eager… to exploit the weakness it had absorbed. Monday’s noon hour was eager to be entered above the morning’s high. But Monday’s last hour was not eager enough to extend its slightly higher high, so a late drop retraced 38.2% of the day’s rally.

Pattern points… (Setups and technicals)[pay]
Monday’s recovery from its overnight dip rallied 14 points to fresh highs attacking 1418.00, closing the cash session at 1413.25. Despite the late slide, this is above the last two prior high closes: Last Monday’s 1411.25, and the prior Monday’s 1407.00.

The late slide was just that. Monday afternoon’s bias environment was exited at 2:30 in recovery mode from testing the noon hour’s 1415.50 lows, and the session’s last hour was entered 1 point above the afternoon bias environment’s 1416.50 high. Strong-handed sellers would have prevented both.

None of which is a buy signal, are immunization from a later drop. But a later drop could be sponsored only by weak hands. That would apply to Monday’s later drop to 1412.25, despite seeming strong-handed for trending straight down throughout the last hour.

The drop could still be productive, as was a similar setup off of the 1408.00 high two Mondays ago. Its 28-point drop to 1380.50 was recovered entirely before fulfilling the week-old outstanding bias-up target at 1410.25. No further drop is required before fulfilling this Monday’s 1420.25 outstanding bias-up target. But the unfinished business above won’t necessarily prevent a bigger drop.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday morning’s break above 1408.00‘s bias-up signal was premature, so retesting it overnight as support could launch another upleg targeting 1422.00 or even 1427.50. But opening under 1410.00, regardless of whether 1408.00 were tested already, would be difficult to recover at all.[/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.