Market Wrap

Don’t forget that there is NO… Saturday Strategy Session this holiday weekend. Feel free to make stock requests in the chartroom intraday Friday.

Pattern points… (Setups and technicals)[pay]
Thursday’s buyers were very productive. Rallying 16 points to 1357.00 from the flat open at 1341.00 is impressive in any case. Its 23-point rally from the 1334.50 overnight low was even more impressive. Is there anything left?

Only one pullback of any consequence interrupted the rally, but none since recovering 1346.50, so buyers haven’t really refueled. The afternoon’s 1355.50 bias-up target was not only met, but met at the beginning of the bias environment to interrupt the rally’s momentum. And despite exiting the bias environment in position to extend higher, the rally did not resume.

Hovering around a target, at prior highs, is not pessimism. The move left no higher objective outstanding, nor did it close above its most recent objective. Wednesday’s pre-open “new Globex trend extreme” at 1358.00 might attract price higher, probably up to 1360.25 if at all. But Thursday’s buyers gained no traction for their effort, so probing higher would be unlikely to extend, and vulnerable to reversing down.

A reversal down could be very ugly since Wednesday’s closing indicator suggests that big money has been distributing at the range’s upper-end. That said, that is not a signal that momentum has actually reversed down, but an indicator of being likely to reverse down. If a decline is underway into Friday afternoon, then Thursday’s bounce should make the decline it that much uglier.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday’s sharp rally would have been signaled early had the open rejected a brief gap down. It did not, but an overnight probe of fresh lows had been recovered. So, if the market is in the mood for considering overnight action, then an overnight probe of fresh highs that retraces through the open would be bearish.[/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 morning’s failed probe… above prior highs set-up a bearish indicator. Two, actually. Both the 3-Day Weekend indicator and the Wednesday Expiration Indicator. Then, the reversal down probed several relevant support levels. The resolution to any one of those tests stood to negate the morning’s bearishness…

Pattern points… (Setups and technicals)[pay]
In fact, Wednesday’s reversal retraced both of Tuesday’s 10-point surges. The overnight surge above 1348.00 was retraced through the open. Tuesday’s pre-close 10-point surge from 1337.75 was retraced to within 1 tick 24 hours later.

It would be odd for such blatantly impatient optimism at the low to produce a durable bottom. Or, at least for it not to resolve in at least one more fresh low. In either case, immediately rallying should be doomed to failure — whether from 1348.00-1349.00, 1352.00 or 1358.00.

Immediately extending down Thursday could react up sharply if fresh lows were absorbed through an initial timing window. Otherwise, gapping open above 1351.25 and extending higher immediately would shift momentum back upward, suggesting that Wednesday’s drop had run its course.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The premise is that big money is distributing ahead of expiration. So, the bias — if not also the trend — should be down into and out of the weekend.[/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.

That was quite a day… during Tuesday’s last half-hour. A 10-point, 30-minute surge from intraday low to intraday high. It was quite a day before that, which is when real traction was gained. This, too, shall pass…

Pattern points… (Setups and technicals)[pay]
Tuesday’s late surge was clearly exacerbated by a perfect storm of  price, technicals, and timing. The afternoon’s 1337.25 bias-down target had been met twice within 2 ticks. RSIs were either making higher lows, or diverging positively, and the last half-hour can get silly.

Silly, or not, Tuesday’s late surge was a single leg. In other words, there was no relevant retracement until its peak. Since at least two prior highs were probed, there should be at least two uplegs. That leaves one outstanding.

For closing above the morning’s highs — regardless of still being in negative territory — buyers did gain traction for their efforts. Last-minute moves are less reliable, but for now that’s the premise. Assuming that the late surge isn’t reversed immediately, then the next high should touch at least 1351.75. Favorable conditions could extend up to 1353.75 or 1357.75.

Opening Wednesday back under 1343.00 would suggest Tuesday’s late surge was being invalidated, confirmed back under 1341.50 and 1339.25. All of which is possible, but not very likely without first trying to extend the late surge.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday’s close will be important for considering the Expiration Indicator and the 3-day Weekend Indicator. For example, closing above prior highs would tend to be bullish, while probing and rejecting fresh highs might be bearish. We’ll look more closely Wednesday afternoon.[/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.

Another day, another resolution… the Greek debt crisis. The question is whether good news can be released while testing prior highs, or if that is reserved for tests of support.

Pattern points… (Setups and technicals)[pay]
Monday’s gap up to 1348.50 was still being tested at Monday’s close(s). And that was after probing the open’s 1350.00 high. Buyers gained no traction for their effort.

The recovery from intraday lows could have left pent-up buying pressure outstanding by not yet touching the session’s prior highs. Or, the recovery could have left the open’s gap outstanding by not probing a fresh high. Instead, Monday’s buyers were fulfilled.

When buyers gain no traction one day, then extending higher the next day would require gapping up. A probe above prior highs would not be assured of extending higher. And it would not be immune to reversing down sharply, not until the 10:15 bias timing window had closed.

The gap back to Friday’s close does not require being filled. No part of Friday’s range requires being tested.But it would be unusual not to, since Monday’s rejection of Friday’s range quickly peaked.That said, any test of Friday’s range can be delayed indefinitely if not being tested already by a dip Tuesday morning, or if fresh highs aren’t rejected Tuesday afternoon.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s resolution is so pivotal because Wednesday’s close will be set-up two indicators: the Expiration Indicator and the 3-day Weekend indicator. [/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.

Saturday’s Strategy Session begins at 9:30am ET… We’ll discuss the market’s bigger picture, and also review stock charts on request. (The next Strategy Session will be two weeks later due to the interim three-day holiday weekend.)

Pattern points… (Setups and technicals)[pay]
Wednesday’s breakout above 1343.00 was hardly confirmed Thursday by closing back at Wednesday’s 1348.25 pre-open high. The signal could have still produced a recovery from dipping to 1343.00. But the overnight drop was much deeper than that.

Friday’s intraday follow-through was not deep enough to invalidate the breakout, which required closing under Tuesday’s 1333.25 prior low. That means the rally could resume immediately, if begun appropriately, for example by gapping up above 1343.00.

And Friday’s close was still testing Wednesday’s 1338.25 low to avoid signaling whether the trend had reversed down. That means sellers probably need new sponsorship to extend down, because Friday’s sellers may not have gained traction.

Monday’s open could still gap down. Testing 1329.00 lower prior highs — back to 1323.00 or 1317.50 — could complete a correction and launch a retest of last week’s highs, if not a new upleg.

The rally’s 1343.00 target may continue proving itself unwilling to let go, as it proved all last week. A retest of 1343.00 is not required. But retesting 1343.00 sooner rather than later — from a retest of Friday’s ~1334.00 low, instead of from testing 1329.00 “lower prior highs” — could be required to form a more durable top.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Friday’s last-minute surge extended above the session’s 1340.25 prior high to 1341.00. But not when it mattered. The cash session close equated to 1339.00, barely making it that high that late. That’s the work of weak hands. Although extending any higher Sunday night could gain traction, it would further define the move as being doomed to failure. [/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.