Market Wrap

Tuesday’s session was not “ineffectual pessimism”… This means it can launch another rally Wednesday. But it also means that not extending higher without delay would keep the door open to lower targets below. [pay]

Pattern points… (Setups and technicals)
Tuesday’s signals were interesting. At least, there resolutions were interesting. Their eventual resolutions:

Initially, the open’s “session-long decline” triggered under 1190.50 didn’t produce fresh lows during the session’s last hour. The morning’s 1191.50 bias-down signal was rejected by recovering it through 10:30. And the afternoon’s 1190.50 bias-down signal produced fresh session lows that were retraced entirely.

But the eventual resolutions were not inappropriate. The session-long decline may have prevented a recovery into positive territory, and Tuesday’s cash session closed at the signal’s 1190.50 trigger. The morning’s bias-down target was met briefly at the morning’s 1184.00 low. And the afternoon’s 1184.75 bias-down target’s test did produce fresh session lows.

Tuesday’s signals were all influential, and the session-long decline may still be. Price action has been weak since testing the bounce’s 1199.00 target Monday. Being a corrective bounce, there is no need to form a bigger top before reversing down. So, almost any further delay in beginning a downleg Wednesday would make the upleg likelier to resume.

What’s Next… (Outlook and opportunities)
If Wednesday isn’t already rallying above 1198.00 before the open, then Tuesday’s session-long decline should already be producing lower lows. And its force may compensate for the delay. Oversold RSIs at Tuesday’s 1177.50 low require a retest, and could attract price lower overnight if 1186.00 were broken as support.

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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 up extended higher… and probed higher. Too bad the day ended while testing its target. Exceeding or rejecting it would have triggered a clear path up or down. But ending the day while testing its target delays the next leg’s signal. [pay]

Pattern points… (Setups and technicals)
Extending the rally Monday would have had potential up to 1199.00. The target was met during Monday’s last hour. It was probed up to 1200.00 and to 1201.75. Each interim retracement dipped under 1199.00.

A post-close dip fell to 1194.75. Between the attraction and reactions, clearly 1199.00 proved its relevance. Its recovery would put into play the next higher objective(s). How’s that going?

Unfortunately for the recovery, Monday’s last hour was not entered above prior highs. And RSIs diverged negatively. Monday’s close was essentially equilibrium, i.e. closing AT at target, instead of exceeding it, or rejecting its test.

1199.00 may still be the bounce’s high. But due to closing Monday while still testing it, we won’t know that answer until Tuesday’s noon hour, or if Monday’s open were to gap sufficiently.

What’s Next… (Outlook and opportunities)
Gapping open above Monday’s 1201.75 high or under the 1190.50 last relative low would be likely to trend in that direction. Trending up would have potential to 1226.00-1230.00, to 1242.00 or even to 1269.00. Trending down could hold 1180.00, but almost any lower would find a big air pocket below. (I was away from the market after 3:45 Monday, so there was no Market Wrap)[/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.

Housekeeping!… Don’t forget to join us for Saturday’s Strategy Session at 9:15am ET. Its link can be found in the blog’s sidebar… Also, for chartroom subscribers, be sure that you are logging in from the sidebar in case of any change to its link.[pay]

Pattern points… (Setups and technicals)
Friday’s 18-1/2 point intraday range was very narrow, relatively speaking in this recent environment of volatility. It was also “ineffectual optimism.” Friday’s buyers were weak-handed, and they didn’t gain traction for their efforts.

It was optimistic – as much as possible – by gapping up, probing prior highs, probing the morning’s high, and trading exclusively in positive territory. It was ineffectual by closing back under the morning’s high and under the prior high.

Ineffectual optimism doesn’t prevent extending higher. Like the setup left at Thursday’s close after its buyers failed to gain traction, gapping up above the right resistance could extend higher. On Friday this resistance was 1282.00, just 14 points above Thursday’s close.

Now there is an added degree of difficulty after testing 1182.00 Friday – it is 1199.00. Just 22-23 points above Friday’s close. Should be simple enough – seriously, if a corrective bounce intends to extend higher Tuesday. A firm open Monday could still trend up intraday to test 1199.00, but it would be likelier to push back. Hard.

Otherwise, the past week’s action is resembling more of a bearish Flag pattern, and not so much basing that might launch a bigger rally. Last Monday night’s 1077.00 “new Globex trend extreme” need not be retested immediately, and probably should not be if the lows intend to hold.

What’s Next… (Outlook and opportunities)
A weekend of opportunity to grab headlines might be unusually quiet, according to Friday’s narrow range. But that won’t preclude volatility on Monday. And trying initially to trend sharply in either direction without some new development – whether as a relief rally, or as another sell-off attempt – should find its sponsorship is thin, and refueling a much more substantial move in the opposite direction.[/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.

Tick, tock… The weekend’s illiquidity can invoke fear of not being long, as much as fear of being long. A squeeze or a dive into the weekend wouldn’t be surprising. [pay]

Pattern points… (Setups and technicals)
Thursday’s session took a major turn from its pre-open indications. A 30-point rally recovered 1126.00-1128.00 and 1132.00 in time to shift momentum upward. No further selling attempt was very productive, much less gained traction.

At least, not until the last 15 minutes. Not until testing 1178.00, all the way up to 1184.00. Both Monday’s 1178.25 post-open high, and Tuesday’s 1175.50 last-minute high, were probed as resistance and not recovered. Buyers expended energy without gaining traction.

A trend that isn’t gaining traction can still extend, by gapping. Gapping up Friday above 1182.00 would target 1199.00. Remember when 17 points used to mean something? The next higher targets do: 1226.00-1230.00, 1242.00, and 1269.00.

But the higher targets come into play only if 1199.00 were exceeded. And there’s no assurance of even putting it into play above 1192.00. Almost any initial weakness Friday under 1163.00 could extend down to 1143.50.

What’s Next… (Outlook and opportunities)
This being a Friday, the morning’s bias signal is likely to persist through the noon hour. And this being an amazingly volatile environment, the afternoon bias is likely either to extend the morning’s trending, or else reverse it sharply… Thursday’s Market Wrap recording is available here.
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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.

Cue up the Jaws theme music… “Just when you thought it was safe to go back in the water.” Tuesday night’s retracement had corrected just enough optimism that another rally leg could form. Then the bottom dropped out, almost literally. Perhaps that is saved for Thursday. [pay] Here’s the link to Wednesday’s post-close Market Wrap.

Pattern points… (Setups and technicals)
Wednesday morning’s ~1122.00 prior lows weren’t probed until the session’s last 10 minutes. The afternoon’s slide then quickly bottomed at 1113.75, but its bounce did not recover the prior low. Sellers gained traction for their effort.

So, the late drop’s sponsorship must be strong hands, since it extended down under 1143.50‘s last unfinished business, and closed under prior lows. Simultaneously oversold 1-minute and 3-minute RSIs at the 1113.75 low also reflect strong-handed sellers.

Bouncing from oversold RSIs would likely fail. Wednesday’s inside day makes trending difficult if not trending hard early. For example, gapping up Thursday above 1143.50 would be likely to extending higher into the afternoon. Any shallower opening bounce, or initial weakness, should resolve in fresh lows under 1113.75 before the 10:15 bias timing window.

What’s Next… (Outlook and opportunities)
One other potential buy signal should be monitored – it is a fresh low under 1096.00 that has already reversed overnight for a gap up. Otherwise, without any rally effort, Monday night’s 1077.00 low and lower could be met Thursday.[/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.