Market Wrap

The new year started with a bang… The rest of the day more closely resembled last year’s choppy range that ultimately went nowhere.

Pattern points… (Setups and technicals)[pay]
The pre-open dip held 1271.00 to maintain the potential for retesting 1280.00. And 1280.00 was retested to within 1 tick. Later dips tested 1271.00 during the noon hour, into the 1:20 bias timing window and then before 1:30. The potential to 1280.00 was met only by the proxy of a 61.8% retracement to within 1 tick of 1277.00.

1271.00 was being tested again at the close. Although not broken, no recovery was completed. The door is open to probing under Tuesday’s lows down to 1267.25 or 1262.50 so long as 1273.25-1274.00 holds as resistance.

A dip could develop and resolve entirely overnight, allowing Wednesday’s open to already be in recovery mode to probe Tuesday’s highs. A dip could instead gain traction to attack Friday’s 1252.00-1253.00 close. Recovering to probe Tuesday’s highs — whether Wednesday or later — could trend higher. Retracing Friday’s close would likely trend much lower.

[/pay]What’s Next… (Outlook and opportunities)[pay]
If a durable downleg were going to originate from Tuesday’s elevated range, then it probably would have begun Tuesday. Maybe it did, with the closing action testing support. An earlier dip would have been more reliable, but look out above if sellers haven’t exploited it much after midnight. [/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.

Have a safe and Happy New Year’s… I’ll see you back here after the weekend!

Pattern points… (Setups and technicals)[pay]
1256.25‘s bounce target was still being tested at Thursday’s close. It was also overlapped at almost every one of Friday’s first-hour checkpoints. Its magnetic attraction was established, and even normal volume would have been unlikely to trend away.

Friday’s low-volume session didn’t stand much of a chance.

Eventually, a sudden, steep and relatively substantial drop from 1256.25 probed the overnight lows down to 1252.50. The low’s oversold RSIs helped to launch a bounce, but also required a retest of the 1252.50 low — preferably to also test 1251.00. A dive to 1250.75 into the cash session close neutralized these attractions below.

Unfinished business below would have kept alive the bearishness through the 3-1/2 day weekend. Fulfilling the targets, and holding their support, does not. So, the market will make a big decision when the New Year begins:

Either Thursday’s bounce was corrected Friday so a bigger bounce could begin, probably by gapping up above a prior high like 1258.50, targeting fresh highs up to 1263.00. Or, Friday’s dip will continue unwinding Thursday’s corrective bounce, back to Wednesday’s 1247.50 “lower prior highs,” probably also filling the gap back to Wednesday’s ~1245.00 close. Exceeding either objective above or below would likely trend in that direction.

Regardless, Tuesday’s resolution could very likely set the tone for January — similar to an old mainstream axiom that rarely holds true anymore, but may yet be operable this year.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Globex opens Tuesday at 6:00am ET. We’ll have an idea from international exchanges before then what kind of open is in store. Post any questions to this post’s comments section in the blog.[/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 bounce did what… Wednesday’s session did not, and finally reacted to Wednesday morning’s plunge. Thursday’s reaction was up, which was likely since all of Wednesday’s instead of resuming the drop

Pattern points… (Setups and technicals)[pay]
Thursday’s extended narrowing range finally broke. It broke higher, and finally fulfilled the afternoon’s 1256.25 bias-up target. Breaking out after 3:00pm instead of before, and fulfilling buying pressure, both made the breakout vulnerable to reversing down. But it did not.

1256.25 was still being tested or overlapped withing minutes of the close, so it was not recovered. Having been the corrective bounce’s objective, the corrective bounce may now be done.

Regardless, the pattern’s resolution should be in-play at Friday’s open. The fast-approaching 3-day weekend will make Friday afternoon’s volume evaporate. Any trending or rejection of any trending — or any trending and its rejection — must develop overnight or almost immediately Friday to gain traction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
HAPPY NEW YEAR! Thank you so much for letting me part of your trading world in 2011. The opportunities for 2012 seem very exciting, and I look forward to sharing in them with you. [/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 night’s range suggested things… were heating up. Wednesday’s action suggests the rally is cooling down. But one day — let alone one overnight session — does not a trend make. Thursday’s resolution could dictate early January’s action.

Pattern points… (Setups and technicals)[pay]
Wednesday morning’s slide down to 1245.00 was retraced up to 1249.00, eventually. The bounce was reversed down to 1243.00, eventually. The close was still testing 1245.00.

1245.00 will break free. Eventually. But that’s a long time to range sideways. Unless Thursday’s open were to compensate for the delay by gapping up above 1249.00 and extending higher, the pattern remains likely to resolve down.

My 3-day weekend indicator triggered. No prior low was broken, only last Thursday afternoon’s narrow range. And the break held through the close, so its sponsorship gained traction for the effort. The indicator was somewhat bearish, but certainly not bullish.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Get familiar with Thursday’s econ calendar. It is busy, and influential. But it can’t be relied upon to drown out the noise of Eurozone headlines. And they had plenty of impact in the vacuum of Wednesday’s thin econ calendar. [/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.

The first day back from Christmas… wasn’t very different than the last day before it. Early trending, mid-day ranging, and late trending. Except, there wasn’t really much late trending. Can we get trending without volume?

Pattern points… (Setups and technicals)[pay]
1260.50 was the latest sell signal to be probed without triggering a downleg. At least, not yet. It was probed too near the close for its break to be reliable. That explains the lack of follow-through.

Tuesday’s other sell signals were somewhat productive, but still trapped enough shorts to be potentially bullish. Except that the shorts were never squeezed. A lot of potential was left untapped, since no shorts were squeezed to produce a fresh session high.

Probing under 1260.50 earlier before the close could have been a compelling hold-short . Waiting so long undermines the break’s sponsorship. And that leaves the door open to another fresh high testing 1268.00-1269.00.

Testing 1268.00-1269.00 overnight at this stage of this pattern must be rejected quickly to avoid forming a “new Globex trend extreme” that requires being retested intraday.

New high, or not, a test of Friday’s last relative low at 1255.75 remains compelling. Tuesday’s pre-open attempt to reject Friday’s surge from 1255.75 stopped too optimistically short to be a durable bottom. That would have been moot if Tuesday’s opening surge had gained traction, but it never extended higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Narrow intraday ranging on low volume doesn’t often suddenly break into a durable trend. A probe of either fresh highs or lows may be needed to stretch the rubber band. Probing fresh lows first would be problematic since there is essentially an air pocket below. So probes of fresh highs still appear unlikely to gain traction.[/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.