Market Wrap

Thursday afternoon was paralyzed… by anxiousness ahead of Friday’s Employment Situation report. The morning’s break back under 1247.25 had reached its 1241.00 target, tried probing lower, but held. The balance of the session ranged back up to 1247.25.

Pattern points… (Setups and technicals)[pay]
More notably, the entire session ranged around 1245.50.

1245.50 is the rally’s objective that held as resistance through Wednesday’s close to signal that buyers gained no traction for their effort. How absurd that might have sounded, when the Dow had gained 490 points since Tuesday’s close. But the session’s sponsorship morphed throughout the day. And those responsible for its last push up proved to be the later stage players.

At least the shallowness of Thursday’s pullback keeps alive optimism for probing yet higher. Or, for absorbing an initially negative knee-jerk reaction down after Friday morning’s Employment Situation report.

Friday’s session could still trend up into the weekend if a reaction up were not absorbed quickly enough — or, if a reaction down into negative territory were to maintain its recovery back into positive territory. The power of impending illiquidity can cut either way.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Since Thursday’s close was still essentially testing 1245.50, there is no predictability to the next trending attempt or reaction. We’ll look at parameters before the Market Tour. [/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.

Those central banks steal all the fun… The recovery potential up to 1206.00 and to 1213.50 was overshadowed by the intervention’s reaction up to almost 1240.00. That borrowed heavily against future buying pressure, requiring a couple of dips to 1232.50 before resuming the rally up to 1246.00.

Pattern points… (Setups and technicals)[pay]
That pretty much explains it all. Tuesday’s pullbacks had held support, allowing an overnight dip to be absorbed and reversed up sharply – even without the intervention. Wednesday’s pullbacks also held support the post-open dip and the afternoon’s pullback — and didn’t wait until the close before reversing up sharply.

There is a price to not letting the buying pressure become pent-up overnight — it is fulfilled intraday. Potential up to 1245.50 was met in Wednesday’s final minutes. It was probed up to almost 1247.00 before reacting down to 1243.00.

Still testing resistance instead of closing above it fulfills its attraction without putting higher highs into play. Closing below it without first testing it would have left outstanding its attraction above. Thursday’s open has the benefit of neither.  Trending away from 1245.50 overnight would be likely to reverse back in the opposite direction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There is one exception to overnight trending not gaining traction —  and that is gapping down under the afternoon’s 1232.50 low to trigger a session-long decline. Otherwise, pre-open and post-open news will produce choppiness, but relatively predictable outcomes.[/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 highs were left untouched… Not that they required being tested, but they weren’t rejected. The market tends to retest them if not rejected immediately. Or, if not rejected much more substantially the following day.

Pattern points… (Setups and technicals)[pay]
Tuesday session went out testing 1194.00 support. So had the afternoon’s bias environment, which also went out testing 1194.00 support. And positive territory was maintained.

Breaking under 1194.00 at this stage of this pattern would be rewarded by collapsing prices through Wednesday’s open. If the whole point of the exercise was to chip away at 1194.00‘s support, then Wednesday’s open should already be in the process of breaking lower.

So, not already breaking lower at Wednesday’s open would be likelier to retest the 1205.00-1206.00 overnight highs. An entire session developed without testing it, but also without rejecting it by closing under a prior low. Immediate strength at Wednesday’s open would be credible for completing the retest, perhaps even extending higher.

Otherwise, breaking lower — under 1189.00-1190.00, then quickly extending under 1186.00 — would begin a relatively quick process of retesting the 1147.50 Thanksgiving lows.

[/pay]What’s Next… (Outlook and opportunities)[pay]
I noted in the Market Tour that the overnight highs were likely to be retested since they still weren’t rejected by the close. A post-close 8-point slide to 1189.00 (reacting to downgrades) is threatening to tumble anyway. Considering the extra dip, opening firmer would find buyers extra refueled for a rally.[/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.

Round Two coming?… Sunday night’s rally did extend through Monday’s open, but that leg never improved. Did sellers absorb the excessive optimism, or can the optimism become even more excessive?

Pattern points… (Setups and technicals)[pay]
Despite holding 1190.00 support through 1:30 to trigger “late no-bias,” the afternoon never exceeded 1194.00. And 1190.00 support was being tested once again as the bias environment lapsed at 2:30.

This time, it failed to hold. The afternoon’s 1184.00 bias-down target was probed down to 1182.50.

But that wasn’t necessarily bearish — failing to hold support, and extending down. Expending selling pressure can be bullish if it does not gain traction. Monday afternoon’s dip did not. Its dip to 1184.00 satisfied selling pressure, and it was retracing back above 1186.00 by 3-5 minutes before the cash session close. The actual close was above 1190.00.
The last-minute recovery did also test 1192.00 without closing above it. That may be its Achilles heal, if pullbacks fail to hold 1189.00 and 1184.00 support. Recovering 1193.00 overnight could gap up Tuesday above 1196.00 — should — and resume the rally to 1205.00 that Monday morning’s open had tried.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Attention New York area subscribers: My apologies for the short-notice, but please email me your availability to meet informally in the city for drinks and appetizers Tuesday evening. I will provide details in the morning.[/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 thinly traded session… didn’t prevent a very early, very steep, and very substantial trending attempt. It might have prevented maintaining the attempt, which was retraced almost entirely.

Pattern points… (Setups and technicals)[pay]
Is there any escaping a visit to 1142.00? It was put into play by closing Wednesday under 1166.00, and now confirmed by a second consecutive lower close. It was attacked to within 5-1/2 points at 1147.50 before Friday’s open. A 24-point interim rally was largely retraced just to stay within striking distance of 1142.00.

The 1147.50 overnight low is a “new Globex trend extreme” that requires being tested intraday. Gapping up above the 1159.00 last relative high robbed sellers of their traction, but too much buying pressure was expended too quickly to be maintained. It took until the cash session’s last minute, but 1159.00 was finally retraced.

It’s possible that post-close sellers are now the ones to have expended too much energy to be sustained. The post-close break visited 1149.25. The hour before the close was spent entirely ranging around 1161.00 support. Gapping open above 1166.00 would suggest the late selling had been absorbed.

Otherwise, immediately breaking under 1153.00 through Monday’s open would be likely not only to retest 1147.50, but also to visit 1142.00. Delaying a recovery from there would find little chance of durable support before attacking 1111.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Whether by gapping up enough, or by quickly printing and recovering from a low enough low, Monday has potential to end the decline. But almost any delay in either a rally gaining traction, or in the decline losing traction, would suggest much bigger selling pressure on its way.[/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.