Market Wrap

Don’t forget about Saturday… and about the Saturday Strategy Session. Its link is in the sidebar. We’ll discuss the market’s bigger picture, and also take requests for instant analysis of any stocks.

Pattern points… (Setups and technicals)[pay]
Did Thursday night’s test of 1368.50 fulfill the required retest of last Sunday’s “new Globex trend extreme”? No. But it will seem that way Monday if the open isn’t already rallying.

1368.40 was the SP contract’s high following last weekend’s Greek debt deal. It was retested overnight. Its reaction down closed Friday under Tuesday’s 1365.00-1365.75 prior highs. So, buyers gained no traction for their effort.

The cash session close equated to 1364.00, narrowly avoiding a close under 1362.00-1363.00 which would have gained traction.

A narrow 6-point range on a Friday would not be very predictive, even if it did trigger a signal. Its historically low volume pace would undermine a signal, anyway. But a lot of selling pressure was expended since last Sunday night, and the opportunity to exceed it was not exploited. Missing another opportunity to extend higher here can be very bearish.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Euro and Crude Oil action attacking or testing their own targets/resistance have gotten extended, too. They’re rallies also depend upon extending higher without delay to avoid sharp reversals. [/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.

2-1/2 days spent dipping back… into and under Friday’s range. None of those legs ever gaining traction. Did sellers finally throw in the towel Thursday?

Pattern points… (Setups and technicals)[pay]
Thursday’s 1360.50 noon hour high wasn’t probed until after the session’s last hour had begun. The break extended higher through the 3:10-3:20 window, which tends to be bullish. The cash session’s close was just above 1360.50 (just higher, despite having probed it up to 1362.75), which is just as bullish.

But the hesitation to blow through the 1362.00 overnight highs does concern me for the potential of another refueling dip before extending the rally. That said, a gap down has room down to 1357.25 before triggering a session-long decline.

Otherwise, Thursday’s recovery appears poised to extend into Friday’s session. The next questions to answer, then, will be what is the timing of retesting Sunday and Monday night’s prior highs, and is that early enough to allow time for its rejection, or late enough to allow extending higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The next higher resistance has been 1371.00. This has not changed. It need not be tested before a reversal down gains traction, but it would help for clarity’s sake. Meanwhile, closing above 1371.00 would all but ensure extending higher next week.[/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.

Ignoring the overnight rally… would seem to have a purpose. One purpose might be to trend down, instead. Wednesday’s session did spend its entirety in negative territory. And it did end lower. But it did not trend down, and that doesn’t really reject the overnight rally so much as ignore it.

Pattern points… (Setups and technicals)[pay]
There was no hold-short indicated through Wednesday’s close. That is despite the likelihood of dipping further to touch at least 1353.50 at some point before any sizable bounce would be credible. And that is despite the less likely, but still likely potential to probe fresh lows at 1351.50. These attractions could be met overnight, and react up to greet Thursday’s open already in recovery mode.

In any case, Friday’s 1355.00 low was still being tested at the close, essentially holding as support. And that was despite being probed intraday. That is an interesting turn of events from Tuesday and Wednesday’s inability to hold and recover above Friday’s ~1361.00 high.

And that is a weakness that sellers have been unable to exploit for a second consecutive session.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Two full days under pressure, but not extending down, still in nearby proximity to Sunday and Monday night’s highs. Immediate weakness at Thursday’s open would get a benefit of the doubt for extending lower. But immediate strength — regardless of whether Wednesday’s lows were retested — would be credible for retesting the 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.

Overnight reactions to the weekend’s Greek deal… were never retested Tuesday. Not fully. They were largely rejected. Not by enough to signal momentum already reversing down. But a fresh high would be vulnerable to peaking.

Pattern points… (Setups and technicals)[pay]
Tuesday afternoon’s drop snuck itself into an otherwise narrow range, which had begun three hours earlier, touching three separate timing windows. Its break missed an opportunity to bottom quickly at 1360.50, and extended lower instead to 1355.75.

But it was the same break, regardless of its deeper drop. So, it is an extended break, not refueling sellers until the last-minute bounce back to 1360.50.

And the extended break gained no traction, since it did not maintain the relevant portion of its break. That last bounce was no small victory for sellers, not for what buyers achieved, but for undermining sellers. Despite exiting the bias environment and entering the last hour under Friday late high, sellers failed to exploit that buyers were marginalized.

A retest of Sunday night’s 1369.00 “new Globex trend extreme” is not necessarily likely, but it remains possible — presumably up to 1371.00. So long as Tuesday’s slide doesn’t resume first…

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s 1355.75 low first printed during the afternoon’s bias environment. Closing action bounced. So, gapping down under 1355.75 would trigger a session-long decline. Its minimum objective would be 1350.50-1351.50. That could also be its maximum objective before resuming the rally Thursday. Closing under Friday’s 1355.00 low would put of the rally for a much longer time.[/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.

However we characterize Friday afternoon… “biased downward” it was not. So, did Wednesday’s Expiration Indicator misfire, or was it skewed by the three-day weekend? If it’s the latter…

Pattern points… (Setups and technicals)[pay]
If the Expiration Indicator’s full effect was skewed by the three-day weekend, then perhaps the 3-day Weekend Indicator was skewed by expiration. Each is already an unusual event — not abnormal, just not usual — but even more unusual to coincide with each other.

If the indicators influenced Friday’s price action at all, it was to contain the afternoon’s range within the open’s surge to 1361.25. At least the Expiration Indicator can be credited for retracing all of the open’s surge back to Thursday’s 1355.00 close.

In fact, the open’s surge fulfilled the required intraday retest of Wednesday’s 1358.00 “new Globex trend extreme.” Its retest was likely to touch 1360.25, which was essentially Friday’s opening and closing prints.

A lot of energy was expended in avoiding negative territory, without gaining any traction for the effort. Either leaving the open’s 1360.25 gap unfilled, or closing above it, would have created “unfinished business” above to attract price higher after the weekend. Instead, the attraction was simply neutralized.

Sellers gained no traction for their effort, so the burden of proof is still on them. Wednesday’s indicators suggests they will make an effort when the week begins. Almost any initial weakness would be credible for trending down Tuesday morning. Regardless of Tuesday’s opening gap being up or down, not trending down through the opening 15 minutes of volatility would likely rally into the afternoon.

[/pay]What’s Next… (Outlook and opportunities)[pay]
These parameters could apply to Sunday night / Monday morning Globex action, or even to Monday night. Since Friday’s action was self-contained, leaving no unfinished business, immediately breaking under 1357.00 could be enough to retrace at least to 1346.50 — any lower would start putting into play 1327.00-1330.50. But maintaining an opening probe into positive territory would suggest 1371.00 is 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.