Market Wrap

Can you make it this weekend… to the Saturday Strategy Session? Its link is in the blog’s sidebar (it’s not in the usual daily chartroom), and begins at 9:30am ET. We’ll review the broader market, lessons from the week’s various setups, and then take your requests for an instant chart analysis.

Pattern points… (Setups and technicals)[pay]
Friday morning repetitively teased the 1369.00 bias-down signal. Its eventual break was likely to aggressive. It did trend down relentlessly to 1364.00, but that move only equated to the earlier 4-point bounce off of 1369.00 to 1373.00.

1369.00‘s break at the open would have trended down sharply through the morning, and into the close. Although buyers fought hard to avoid that, they did not exploit their success, since 1369.00 was not recovered at the close. It was still being tested — but by then the burden of proof was on buyers to recover above 1369.00 decisively, which they failed.

Wednesday’s reaction down from fresh highs to close under prior lows wasn’t likely to extend down. Two subsequent consecutive sessions contained within Wednesday’s range have now absorbed Wednesday’s shock to the system.

Wednesday’s reversal attempt is now free to resume, and also vulnerable to being invalidated. Gapping open in either case is likely. Unless yet another “final” resolution to the Greek deal is announced. Regardless, closing Monday beyond either end of Wednesday’s 1362.00-1377.00 intraday range would be likely to extend in that direction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A resolution down remains likelier than up. Not so much because Friday’s buyers failed to exploit their morning success. More so because the gap back to Wednesday’s 1364.00 close should still attract price down, and because the week’s 1353.00 low made the 1350.25 prior low’s test likely. And no unfinished business above remains outstanding. Breaking to new highs in spite of these lower attractions would have to be respected.[/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.

Thursday’s rally confirmed… that Wednesday’s drop didn’t trigger a trend reversal. The same session that contains the trend’s extreme tends not to also signal momentum reversing down. But Thursday’s rally left outstanding some interesting points below…

Pattern points… (Setups and technicals)[pay]
Thursday’s bias environment was exited low enough to invalidate its 1376.25 bias-up target. And the 1372.00 prior low was broken in time for a drop to 1368.00. But RSIs diverged positively at the low’s retest to recover 1372.00. The late sell-off gained no traction.

Buyers also gained no traction. The cash session close did not recover above the morning’s 1373.50 high, after having probed a higher high intraday. Friday can still trend to fresh highs, but probably only if the open were to gap up. Not gapping up would be unlikely to probe fresh highs. Probing fresh highs without gapping up would be likely to reverse and trend down.

Thursday’s gap up left a gap outstanding back to Wednesday’s 1364.00 cash session close equivalent. It will need to be filled at some point, since the it was created by an “inside day.” A test of 1350.25 also remains outstanding.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday’s late bounce from 1368.00‘s retest extended up to 1377.00 after the Globex open. This is not a “new Globex trend extreme,” not yet, so it does not require a retest. Regardless, this being a Friday, the morning’s bias signal is likely to persist through the noon hour.[/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 close narrowly avoided… a clean “hold-short” through the close signal under 1364.50. That didn’t stop a post-close plunge to 1356.75. An aberration? Not entirely. Price was ranging 1360.00-1362.00 and hour later.

Pattern points… (Setups and technicals)[pay]
Regardless of triggering a “hold-short” through the close, Wednesday’s sellers did gain traction. And they left no unfinished business above. The close was back under the two prior high closes (Monday and Tuesday) and at the third prior high close (Friday).

Despite also closing under Tuesday’s prior low, there is a problem with calling Wednesday a trend change — the same session contains the trend high. Almost any delay in breaking lower Thursday could trigger another bounce to 1368.00.

Meanwhile, the next lower objective is to test last Thursday’s 1350.25 “actual low.” Its retest was created by Monday’s dip back to last Wednesday’s 1353.00 “actual low.” Above 1369.00 would start to suggest another rally leg underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
AAPL stayed above the fray while the broader market tumbled. This is a phenomenon I mention occasionally, when only one or two stock stories are available to attract cash. This tends to be undone almost immediately, regardless of whether the broader market decline were to end. Couple this with the significant resistance being tested all day Wednesday. Almost any potential for AAPL to extend higher depends upon extending sharply higher without delay. [/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’s choppy session… wasn’t just a market with a split personality. It was a market that kept switching between its two personalities. Often, the winning personality isn’t the last one standing, but the last one hiding — keeping its energy in reserve.

Pattern points… (Setups and technicals)[pay]
The 1373.75 overnight high’s “new Globex trend extreme” was not retested intraday. The morning’s recovery to 1372.00 served as proxy for being a 61.8% retracement back into the range that produced it. A new downleg could have begun without leaving unfinished business above.

Then 1372.00 was retested in the afternoon. There was really no bearish reason for that, as the level had been retested already. It’s not quite bullish, as a downleg could still begin. But now a fresh high at or above 1374.00 is likely.

Gapping down or immediately dropping Wednesday under 1366.50 would suggest the last bounce to 1372.00 was only noise in the range. It would also trigger a “session-long decline,” free to extend back down to last week’s lows.

But the likelier scenario is a fresh high, whether is either reversed back into the 1366.00-1369.00 range again, or finally extends higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Very interesting flow of econ events Wednesday, including quarter-end window dressing and the LTRO announcement… Did I mention the potential for Wreversal Wednesday? Should provide a volatile 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.

Monday’s recovery was impressive… until it wasn’t. Buyers got a benefit of the doubt, but now sellers may benefit from the doubt about buyers…

Pattern points… (Setups and technicals)[pay]
The morning’s rally was impressive. A test of the morning’s 1371.00 bias-up target was never official. The 1358.50 bias-down signal after fulfilling its 1353.50 bias-down target, but only through 10:30, and not through 10:15. That was enough for the setup to get a benefit of the doubt. Sellers never gained traction, and 1370.75 was touched.

The afternoon’s rally attempts were unimpressive. Both probes above the morning’s 1367.75 high — to 1369.75 and 1370.75 — were retraced back down to 1366.00. Final bars still overlapped the morning’s high, but did not clearly recover it. Buyers gained no traction for their efforts.

Of course, sellers gained no traction for their efforts, either. Sound familiar? That’s where Friday’s close left us. If the rally were going to extend higher Tuesday, then it must gap up. Not gapping up would be likely to decline.

A decline could retrace all of Monday’s recovery, on the way to reversing the trend to down. Monday’s 1353.00 low touched last Wednesday’s “pivotal low” (the low prior to actual low), all but requiring a retest of Thursday’s 1350.25 actual low.

[/pay]What’s Next… (Outlook and opportunities)[pay]
That unfinished business below tells us that Monday’s bounce was a correction. The bounce’s aggressive nature suggests that, too, especially with its buyers ultimately failing to gain traction. The open’s “session-long decline” setup was swallowed whole and spit out by the bias-down rejection. But a lot of buying pressure was expended just to do so. There is no bullish reason to delay extending higher.[/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.