Market Wrap

Greece reaches a debt accord… mortgage lenders reach a settlement, and Jobless Claims reach a new 4-week low. That should be good for at least, what, a 2-point gain on the day?

Pattern points… (Setups and technicals)[pay]
Thursday’s second consecutive close above 1343.00 confirms Wednesday’s close above 1343.00, targeting 1371.00. Optimal confirmation would have been to close above Wednesday’s highs, but its 1348.25 pre-open high was still being tested at Thursday’s close.

That just prevents considering a “hold-long through the close” setup. Opening above Thursday’s 1351.25 high would still be credible for extending higher. Meanwhile, the attraction back to 1343.00 remains as intact as the range around it.

Apart from the somewhat confirmed breakout, Thursday afternoon’s 1353.75 bias-up target is “unfinished business” above. Its quick test would be likely Friday if the open were to hold or recover its 1348.50 bias-up signal. Its test would be delayed otherwise.While the 1343.00 “breakout” gets every benefit of the doubt for the a brief probe higher. Closing back under 1343.00 would open the door to a brief probe lower.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget about Saturday’s Strategy Session, at 9:30am ET. We’ll discuss the bigger picture, and how Friday’s price action may have affected it, along with doing instant analyses of your 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.

It’s a breakout… but not much of one if Thursday doesn’t confirm. And there are reasons to suspect that won’t happen.

Pattern points… (Setups and technicals)[pay]
Wednesday’s close above the rally’s 1343.00 target put into play 1371.00. A second consecutive higher close Thursday would confirm.

There were some things left to be desired in Wednesday’s close. But a buy signal was still active from 1342.00. The afternoon’s 1348.00 bias-up target was not yet met, and the 1348.25 overnight “new Globex trend extreme” had not been retested.

Another bullish factor was the last 60-90 minutes developing entirely above the afternoon’s bias environment. That is mitigated somewhat by only ranging narrowly instead of trending, but the timing window was higher throughout nonetheless.

For now, it’s a breakout — on probation, until a second consecutive higher close Thursday confirms 1371.00 is in-play. Intraday resistance at 1349.00 and 1351.25, if tested, could still push back for a close under 1343.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Meanwhile, headlines from Greece after the close have triggered a drop to 1343.00. It doesn’t mean much unless extended through Thursday’s open. And back above 1345.50 would suggest the near-term threat had passed. [/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 highs fulfilled a big target… Probes of prior lows were rejected at the last-minute (actually, after the last-minute) to get there. All that buying pressure, all that intent. And yet, the big target held as resistance through the close. It’s not quite a sell signal, but… tick, tock.

Pattern points… (Setups and technicals)[pay]
The potential to 1343.00-1345.25 was fully tested Tuesday. And it defined session highs. Testing the range’s lower-end coming out of the morning’s bias environment launched a sideways range that essentially persisted through the close. Its upper-end was touched just before the close.

1343.00-1345.25 wasn’t even going to be retested — let alone test its upper-end — except that a funny thing happened on the way to probing fresh afternoon lows under 1341.00: a 4-point surge. But it originated too late to gain traction, and the cash session close equated to 1343.00.

Probing fresh highs during the 3:10-3:20 window, and also reversing the probe by 3:20, suggests that buyers are weak hands. That’s not a sell signal, except that it makes a retest likely of the 1341.00 prior low. Breaking under the prior low after rejecting a fresh high would be a sell signal. Under 1336.00 would confirm.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The rally may yet extend higher. Two consecutive higher closes above 1343.00 would put into play 1371.00. But the pattern is unlikely to maintain this level without extending higher. So, not extending higher without delay — or not quickly rejecting a corrective dip to 1336.00 — 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.

Friday’s outsized gains didn’t last the weekend… but Monday regained them. That didn’t do the rally any favors…

Pattern points… (Setups and technicals)[pay]
Sunday night’s sell-off  to 1330.25 did not remain low enough for long enough to gain traction. The open had already recovered back above Friday’s 1333.25 low. Monday’s session was contained entirely within Friday’s range.

Too bad. Sellers gaining traction would have probed prior highs back down to the 1329.00 area. Rallying back into Friday’s range from that much of a pullback would have been relevant. Instead, rallying back into Friday’s range from Sunday night’s shallower momentary pullback was just noise.

Monday’s recovery encountered much resistance from the gap back to Friday’s 1338.50 futures close and by retesting Friday morning’s 1339.75 high. A last-minute surge probed a fresh session high, but it stopped pessimistically short of 1341.25, Friday’s cash session close equivalent.

That pessimism suggests Friday’s high will be retested. As long as we’re in the neighborhood, why not also test 1343.00-1345.00. It’s a rhetorical question.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Probing fresh highs, or not, a reversal down could still gain traction and be very productive. Reacting down from 1343.00 would create at least a corrective drop. But gapping down under the 1329.00 area first would suggest that 1343.00 need not be tested, 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.

Friday’s post-open rally… measured 61.8% of the pre-open spike up. That’s interesting, because a sell signal’s objective would have been to retrace 61.8% of the spike up. Regardless, Friday’s post-open action was going to be a function of the spike. New sponsorship has arrived — how long will it stay?

Pattern points… (Setups and technicals)[pay]
Great jobs data. Participation dropped by an historical degree, shrinking the denominator. The numerator could only look better, regardless of the actual number of employed. So, Friday’s big story was not the details, like January created an unusual number of part-time jobs. Headline writers were only concerned with saving their own jobs in February, and avoid adding to the “8.3%.”

Falling unemployed might seem to diminish the prospects for a QE3, and for maintaining ZIRP. Then, how else to explain the market’s bullish reaction, unless it perceives the employment number to be inaccurate?

Regardless, the market is always right. And regardless of the size of Friday’s gain — both pre-open and post-open or separately — its close was not necessarily above the morning’s 1339.75 high. Not decisively. So, we cannot say decisively that Friday’s buyers gained no traction for their efforts..

Futures spiked down to settle just under the morning’s 1339.75 high. And although the cash session closed higher at 1341.25, the morning’s high was still being tested upon entering the session’s last hour — Friday’s last hour, the least relevant hour of the week. Waiting until that window before extending higher makes its sponsorship suspect, especially when it could not break above the session’s 1341.25 prior high.

Closing above 1343.00 on two consecutive sessions would put into play another rally leg targeting 1371.00. And any reaction down from there would likely be a correction to refuel buyers. (The last two paragraphs were a big part of Saturday’s Strategy Session, and its recording is linked below.)

Whatever was the positive news from the Employment Situation report, Friday’s price action fully reflects it. Mondays don’t tend to confirm a Friday breakout with a second consecutive higher confirming close, but no bad news over the weekend could allow an intraday probe higher. More positive news over the weekend on Greece may be needed to extend the breakout higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The recording of Saturday’s Strategy Session can be viewed by clicking here. Thanks to all attendees who participated.[/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.