Market Wrap

Despite ranging widely around unchanged… Thursday’s session did not validate Wednesday’s last-minute break. Not directly. Invalidating the break would have extended Wednesday’s rally, and Wednesday’s rally did not extend. The burden of proof is still on buyers…

Pattern points… (Setups and technicals)[pay]
Thursday’s open needed to gap up above 1323.00 to invalidate Wednesday’s last-minute break under 1321.00. Thursday’s open held 1323.00, probing it later by 3 points before reversing back under it. Thursday’s close also held 1323.00, ranging narrowly above 1321.00 through the last two hours.

Not invalidating the late break means that it was valid — Wednesday’s buyers gained no traction for their efforts. Other than ranging sideways for a day, the pattern has yet to account for not having any traction up here. And here comes Employment Situation.

None of which precludes the market from trying to probe higher. And this being a Friday, not rejecting fresh highs through the open would be vulnerable to extending higher into the weekend.

But the burden of proof is on buyers. An initially positive knee-jerk reaction could reject its fresh high through the open by sliding sharply into negative territory. And gapping down to a fresh low would begin undoing the rest of Wednesday’s rally.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Where early weakness Thursday could have extended down to the 1311.00 area, now it would also target the 1308.00 area. In other words, almost any early weakness Friday is likely to become substantial weakness. But while fresh highs might push back, look out above if they don’t.[/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.

There was little left to show… for Wednesday morning’s rally by the time it was retraced into the close. Tuesday night’s rally remained untouched. At least, for now. Either the afternoon got carried away with its pullback, or it is threatening to retrace Tuesday night’s rally, too…

Pattern points… (Setups and technicals)[pay]
When Wednesday afternoon’s bias environment began lapsing, the 1324.00 prior low was being tested as support. That was enough weakness (testing a prior low), just in time (by 2:30), to reverse down from probing fresh session highs.

But it wasn’t exploited very timely, and 1324.00 was still being tested well into the session’s last hour. The delay did not prevent breaking to fresh afternoon lows at 1321.00. And holding its support through 3:55 did not prevent its break to 1318.75.

Breaking 3 points under 1324.00 was still credible fore extending down further. Dropping under 1321.00 was less credible because it did not break until the session’s last 5 minutes. Why care? Because 1321.00 is the lower-end to the consolidation off of Wednesday morning’s highs. Closing under it robs buyers of their traction.

Perhaps the late break under 1321.00 was an anomaly. It happens. And when it happens, it is corrected by recovering at the following open. That, or the late break was valid, in which case the timing will be corrected by accelerating the decline’s pace.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping open Thursday back up above the 1323.00 area would correct an invalid break under 1321.00. Gapping down Thursday under 1316.00-1317.00 would correct the drop’s delayed timing by accelerating its pace. The reward to invalidating the drop would be a relatively quick retest of Wednesday’s 1327.00 high. Extending Wednesday afternoon’s drop would target the 1311.00 area.[/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 weak-handed recovery… didn’t prevent Tuesday’s substantial gap up. It just doomed it to failure, a 15-point reversal through the morning. Did it also doom the afternoon’s recovery attempt?

Pattern points… (Setups and technicals)[pay]
Like Monday’s bounce off of the morning’s lows, Tuesday afternoon’s recovery attempt peaked upon testing the 1308.00-1309.00 area again. And the peak came early during the afternoon’s bias environment, again. Also, 1308.00-1309.00 was probed only briefly, attacking 1310.00. Again.

Another weak-handed bounce? Not necessarily. Gapping up above 1311.00 could extend higher to test 1316.00, and possibly attack 1321.00.

But buyers still have not gained traction. An attack on 1299.50-1301.00 would be likely by any dip under 1304.50. And almost any lower would resume the drop with potential to 1285.00-1286.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
1304.50‘s test is already likely since 1306.75 is being probed after the cash session close. If Monday’s lows are probed, then support at 1294.00 might interrupt the decline. Regardless of whether 1304.50 were actually tested, almost any initial strength above 1309.50 would be credible for 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.

Monday’s gap down proved… support no long existed at 1305.00. Monday’s bounce proved the relevance of 1308.00. Finally having closed back under 1311.00, we’ll soon see whether Monday proved at least a corrective drop is underway…

Pattern points… (Setups and technicals)[pay]
Monday’s session was spent entirely in negative territory, after gapping down and probing prior lows. Closing back above the prior lows would have made it “ineffectual” pessimism, except for one or two things. First, the afternoon did not probe fresh session lows, whose recovery would have trapped even more shorts.

Second, Monday’s close above Friday’s 1307.00-1308.00 prior lows was not high enough. There is noise around Friday’s lows up to 1309.25. And it’s not as if 1309.25 wasn’t even touched until very late — it was first tested more two hours before the close, and several times afterward. It would have been recovered if the market had intended to recover it.

Friday’s session was somewhat similar to Monday. Probing its prior lows into and out of the noon hour offered context for the afternoon’s bounce, that its sponsorship was weak hands. Monday’s bounce began after the morning established a bias-down. The bounce’s sponsorship was weak hands.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Also like Friday, there is no unfinished business above, but potential for bouncing further to 1312.75 and 1316.50 before reversing down anyway. Monday’s final minutes could have dipped less than 2 points to neutralize the attraction back to 1304.50, but instead bounced back to resistance  That unfinished business below remains outstanding, along with the gap back down to Monday’s 1300.75 open.[/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… was great, well-attended with very interesting questions. The answers were not terribly long-winded, so you may be interested in viewing the recording. It is linked from the blog’s sidebar.

Pattern points… (Setups and technicals)[pay]
It is difficult to begin trending Friday morning, and it is at least as difficult to stop trending once it begins. But attempting to trend should either succeed, or be rejected. There is no middle ground — only a delay.

Friday’s open gapped down to Thursday’s low, and held it. Trending did not succeed. But Thursday’s low was still being tested when the morning’s bias environment was lapsing. And it was retested as the noon hour was ending. The trending attempt was not rejected.

While the setup tends to resolve sooner, rather than later, it can be later. Friday’s negative close did not suggest that buyers gained any traction, but the session’s “ineffectual pessimism” kept open the door for another rally attempt to 1318.00-1321.00. Friday morning’s bearish setup offers context that suggests a rally attempt would fail.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Immediately recovering 1318.00-1321.00 through Monday’s open would signal a credible rally attempt — 1343.00 can be reinstated, but probably requiring much stronger sponsorship capable of reaching 1343.00 intraday. Otherwise, any probe under Friday’s lows would be unlikely to hold 1305.00, perhaps also breaking under 1299.50.[/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.