Market Wrap

The rally everything going for it… at Friday’s open. Good reaction to good econ report, probe of fresh highs, bias-up. But the only buyers still involved after mid-morning were only able to hold prices aloft. Whether that strategy worked will be determined at Monday’s open…

Pattern points… (Setups and technicals)[pay]
Two consecutive timing windows ranged narrowly around Friday morning’s 1367.00 bias-up target. The target had been met already an hour after the open. A plunge to 1362.75 finally left the range, entering the session’s last hour under the bias environment’s lows.

The last hour’s range was briefer, but just as shallow, and no more relevant. A surge from 1363.00 into and out of the 1365.00 cash session close extended up to 1367.50. Almost as if the break lower never happened.

But there is still a burden of proof on buyers to extend the rally. Friday’s narrow ranges do not require resolving one way or the other. The pattern is only vulnerable to breaking higher or lower.

Just for having probed under 1364.00 there should also be a test of 1358.00. Maintaining a break under 1361.00-1362.00 through Monday’s open would put into play 1355.50, and any lower would essentially target a retest of last week’s 1332.75 low.

An overnight dip to 1358.00 could be recovered in time to greet Monday’s open in positive territory. Regardless of the potential for probing lower — and because of that potential — the rally relies upon gapping up Monday above Friday’s 1368.50 highs. Not gapping up would be vulnerable to trending down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join us Saturday morning if you can for the weekly Strategy Session. It begins at 9:30am ET. The link is in the sidebar (it is not held in the daily chartroom). We’ll look at the market’s bigger picture, review several setups, and analyze any stock requests. [/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 market got what it asked for… in its overnight surge. Greece’s late news Thursday drove the market to test its target within 1 tick. The final tally is yet to come, along with the Employment Situation report…

Pattern points… (Setups and technicals)[pay]
The late surge stopped within 1 tick of the afternoon’s 1362.75 bias-up target. This was actually representative of a cluster of targets within a 3-tick range, so I don’t consider the target to be outstanding.

Nevertheless, 1362.75‘s retest is likely since its RSIs were overbought. The overbought RSIs were lower than their prior highs, but still overbought, requiring a retest.

Overnight action could fulfill the 1362.75 retest. Having reacted down to 1358.75, recovering 1360.00 suggested the retest is already underway. And it could be probed by 1 point or more.

Still, “hold long” through the close was not considered. Regardless of the likelihood for retesting 1362.75 overnight by whatever margin, there is also potential for its test to reverse down before the open. Whenever 1362.75 is retested — if at all — its test should either react down hard, or else extend the rally sharply higher into the weekend.

[/pay]What’s Next… (Outlook and opportunities)[pay]
1362.75‘s retest remains likely so long as Thursday’s last relative low at 1357.50 were to hold as support. Extending under 1355.25 would simply point down. But if the rally were to extend higher, it could enter the weekend testing new highs above 1370.00.[/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’s bounce retraced… much of Tuesday’s plunge. It probed above Tuesday’s intraday range. And it recovered to what had been Tuesday’s minimum objective. But was that enough to invalidate Tuesday’s drop, or even to suggest the drop had ended?

Pattern points… (Setups and technicals)[pay]
The easy answer to both questions above is, “no.” Gapping up left outstanding a gap back to Tuesday’s 1336.25 (basis Jun) close that wants to be filled. That, alone, tells us Wednesday’s bounce was sponsored by impatient buyers, weak hands.

Impatient buyers also rallied above the morning’s 1340.75 bias-up signal, after triggering no-bias. While this invalidated the objective of reversing down to test Wednesday morning’s 1333.75 bias-down signal, it still requires a retracement back down to the morning’s bias-up signal. Again, weak hands.

The afternoon’s probes of higher highs each retraced back under the morning’s 1345.75 high. That is not itself necessarily bearish. Neither is closing back under the morning’s high (which was actually still being tested). But it does mean that buyers gained no traction for their efforts. Their repeated efforts. Impatient buyers, weak hands.

There is potential to extend up, anyway, since sellers also gained no traction — not that they put out any effort. So long as Thursday’s open is not already in decline, the rally is probably extending back up to “higher prior lows” at 1353.00-1354.00. Opening Thursday already in decline probably means the drop has resumed.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The ES front-month rolls forward at Thursday’s open to Jun. Its difference from the Mar contract is (-)5.75. All quotes above are basis Jun. [/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.

How sluggish was Tuesday’s decline?… Tuesday’s noon hour and afternoon bias environment — 12:00 – 2:30 — ranged almost entirely between 1341.00-1343.00. Just over 2 points wide. By then, S&Ps had fallen more than 20 points from Monday’s close…

Pattern points… (Setups and technicals)[pay]
That was only slightly narrower than the 1343.00-1347.00 range that ended just minutes prior to launching the next range. And it lasted longer than an hour. These sluggish intraday extensions of the overnight slide suggests that the decline’s sponsorship was not necessarily the intraday crowd.

A steeper intraday downleg could have extended the decline to provide a snap back up. At the opposite end of the spectrum, closing above a prior high could have allowed a rally to gain traction. However, while a shallow fresh low during the last 60-90 minutes did react up from 1338.50, it peaked upon testing the prior consolidation’s 1343.00 highs. Too little selling pressure, too little bounce.

So, the decline is vulnerable to extending down overnight. It is also vulnerable to completing overnight. Testing 1335.00 or 1330.00 and recovering to greet Wednesday’s open above 1343.00 could extend sharply higher intraday. With or without fresh lows overnight, greeting the open above 1347.00 could also bounce. Either bounce would be only corrective.

[/pay]What’s Next… (Outlook and opportunities)[pay]
An overnight bounce to 1347.00 could refuel sellers. A recovery attempt cannot just reach 1347.00, but must also exceed it through the open to avoid reacting down. Meanwhile, jobs reports start coming in, taking a high profile as Friday’s Employment Situation report nears.[/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.

A Monday sell-off, that wasn’t recovered… that’s new. At least, new for this cycle. Otherwise, Monday dips in an uptrend are more easily recovered. So, either this recovery is delayed, or else, the drop is a glimpse of things to come…

Pattern points… (Setups and technicals)[pay]
Not only did Monday’s open break under 1362.00-1364.00, but it broke lower long enough to renew the bias-down signal. Not that its 1355.50 renewed bias-down target was met (let alone the room around it for noise down to 1353.75). But the pattern that put 1355.50 into play was not rejected.

1362.00-1364.00 was not recovered through Monday’s open, despite being tested as resistance. The afternoon bounce’s sponsorship gained no traction for their effort. Extending higher Tuesday should require gapping up above 1366.50. Testing 1366.50 without gapping up would be likely to hold, and perhaps also to fail.

Meanwhile, a dip that tests below at 1360.00-1361.00 could act as support to launch a bigger bounce Tuesday. Probably only a temporary bounce, but a bigger bounce than Monday afternoon’s.

The only direct path down may be to gap under 1359.00. Under 1355.50 through a relevant timing window would put into play 1350.25, whose break would trigger a much bigger and extended downleg.

[/pay]What’s Next… (Outlook and opportunities)[pay]
While the pattern remains much more vulnerable to resolving down than up, not resolving down Monday did open a very big door to bouncing Tuesday. That bounce would likely be relatively shallow, and likely to resume the decline Tuesday afternoon or Wednesday. Absent gapping sharply either up or down, Tuesday’s session is unlikely to range.[/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.