Market Wrap

Protugal’s non-news news produced a reaction… but nothing lasting. Neither the specific event itself, nor its specific timing were known. But the narrative is an old story. So, the 6-1/2 point plunge it produced was recovered entirely. Same day.[pay]

Pattern points… (Setups and technicals)
That’s not meant to undermine the narrative’s significance. The narrative is well disseminated. Tuesday afternoon’s plunge was justified for the news’ unpredictable timing, and for it inhibiting buyers. But I doubt the downgrade attracted a single new strong-handed seller.

That was already enough for an overnight rally attempt to extend higher, or to absorb an overnight decline. Closing back above 1332.50 confirmed, because closing any lower would have triggered a “hold-short through the close” setup. Sellers tried repeatedly intraday to trigger a downleg, failing every attempt, right down to the close.

So, avoiding a bearish setup was essentially bullish, since the burden of proof was on sellers, and they didn’t convince.

Anyway, the market already figured that out. The 1333.25 cash session close was recovered up to 1337.00 into the futures close. The 1339.00-1340.00 objective put into play above 1307.00-1308.00 is still close enough for noise to touch. Failing to close above it after being tested would suggest the rally had lost its momentum.

What’s Next… (Outlook and opportunities)
Meanwhile, a test of Tuesday morning’s 1327.75 bias-down signal is unfinished business below. Delaying its test until after touching 1339.00-1340.00 would help to attract price back down. Testing 1327.75 first would help to refuel sellers buyers for a better chance at breaking above 1339.00-1340.00.[/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.

If any day can rally like Friday… it’s Friday. The morning’s bias signal tends to persist through the noon hour. And if any day can rally like Friday, it’s the day before a three-day weekend, whose evaporating liquidity scares away counter-trend sponsorship… Don’t forget: no Saturday Strategy Session this weekend.[pay]

Pattern points… (Setups and technicals)
Closing Thursday above 1310.00 had signaled the rally to 1307.00-1308.00  was extending higher. It’s next objective is 1339.00-1340.00. Closing Friday above the afternoon’s 1334.00 bias-up put into play the next higher target, which is 1339.50.

Compared to the measurements of Friday’s uncorrected upleg, 1339.00-1340.00 is just noise around its 1336.50 high.

Meanwhile, 1307.00-1308.00/1310.00 didn’t get much recognition on the way up. Only pre-open action was influenced by 1307.00-1308.00 resistance. And 1310.00 was barely touched as support. The area’s relevance all but demands that it be revisited – whether by a pullback on the way higher, or by a new downleg.

Extending higher, uninterrupted through 1339.00-1340.00, would put into play new highs. New highs, as in probe May’s high, and the overnight Bin Laden bump, too. And the leg’s initial pace would be very aggressive, validating the past week’s runaway optimism instead of correcting it.

What’s Next… (Outlook and opportunities)
Friday’s rally was a surprise. Wednesday’s three-day weekend indicator had suggested the trend would remain up, but the week was already very extended. The day was extended, too, trending up through every timing window. Tuesday’s volume won’t be much busier than Friday, so we’ll see whether that was more responsible for the trend’s direction, or for its relentlessness… Have a safe and happy Independence Day! [/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.

Closing above 1310.00 Thursday… could have reflected strong handed sponsorship of this week’s bounce. This week’s bounce would no longer be only a bounce.  But 1310.00 wasn’t very relevant intraday, and its recovery did not become trending. Not closing higher Friday would suggest 1310.00‘s test had held, and the bounce had peaked.[pay]

Pattern points… (Setups and technicals)
The open’s surge probed the morning’s 1312.25 bias-up target by 1 point. It was not exceeded through 10:15, which would have renewed the bias-up signal. That didn’t prevent probing highs intraday, but they were all retraced to attack 1312.25.

Fresh highs after not renewing the morning’s bias-up can be bearish if not adopted by an afternoon bias-up signal. So, the afternoon’s no-bias signal effectively made trending – whether up, or down – unlikely for the day.

Either of the afternoon’s two dips to 1312.25 could have gained traction, but proved to be too late. A bounce to one last fresh high at 1317.50 released the pent-up buying pressure. It is Thursday’s only fresh high that has yet to retrace back to 1312.25. Suddenly there is pent-up selling pressure.

A pullback has room down to 1307.00-1308.00 without sellers gaining traction. Dipping under 1313.00 overnight, confirmed under 1311.25, would signal the pullback underway. Any lower would target the 1303.00 area, and would no longer be considered only a pullback.

What’s Next… (Outlook and opportunities)
Volume will start to evaporate by mid-morning Friday ahead of the three-day weekend. Any trending not signaled early probably won’t be signaled at all. By the same token, initial trending would be difficult to stop.[/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.

Three consecutive intraday rallies… and each one closed at its last target. Buyers gained no traction for their efforts. But that didn’t prevent new sponsorship from taking over. It’s not common, but it can happen. Extending higher for a fourth day isn’t common, either. But…[pay]

Pattern points… (Setups and technicals)
1:00-1:20 is not necessarily a bad time for a breakout to begin. But if it extends to probe a new session extreme, then retracing it by 1:20 is bad, after all. Weak hands can’t maintain a breakout that begins so late.

Wednesday’s breakout after 1:00 probed a fresh session high and retraced it by 1:20. Both the 1304.00 bias-up signal and the 1304.25 pre-open “new Globex trend extreme” held a test, too. The immediate consequence was a pullback targeting 1298.50.

Closing any lower would have triggered other, lower consequences. Recovering to close at fresh highs would have resumed the morning’s rally. While a bounce did retrace the entire drop back to its origin, Wednesday’s close did not recover above it (until after the cash session close when further gains had become irrelevant).

For a third consecutive day, let’s all say it together: Buyers gained no traction for their efforts.

A three-day holiday is approaching, so Wednesday’s close above 1293.00‘s prior highs does suggest the trend will extend into and out of the weekend. Closing Thursday back under 1293.00 – and preferably under 1287.50 – could serve by proxy as if the range’s upper-end had held its test. Otherwise, pullbacks would be absorbed, and recovered to fresh highs.

What’s Next… (Outlook and opportunities)
Gapping down under Wednesday afternoon’s 1297.00 low would trigger a “session-long decline” setup. Probing a fresh high early Thursday would still be vulnerable to reversing down, until recovering 1307.00-1310.00 through a relevant timing window. At that stage, the rally could be considered more durable than a corrective bounce. [/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 rally couldn’t have started… any later. Monday’s rally gained no traction through its close. Its 1278.00 pullback target was touched just minutes before Tuesday’s open, which didn’t even gap above Monday’s high. But the intraday move never corrected on the way to fresh highs.[pay]

Pattern points… (Setups and technicals)
Monday’s rally gained no traction because it was retraced too far, for too long. That didn’t prevent the rally from extending, it just couldn’t predict it. Meanwhile, the rally could have reversed down.

Tuesday’s rally didn’t gain traction, for a different reason. Its 1293.00 target was met (essentially) at the close. It wasn’t exceeded, which would have put into play a higher target. The rally may resume Wednesday, but no signal has put it into play.

Sellers didn’t gain traction either Tuesday, just like Monday. The rally can signal it is extending higher again by maintaining almost any improvement above 1293.00. But a decline can be triggered by immediately breaking back under Tuesday’s last relative low at 1288.00.

What’s Next… (Outlook and opportunities)
Interesting developments have come onto Wednesday’s calendar with another Greek vote starting at 7:00am ET. The econ calendar has other items, too. But if the vote’s reaction hasn’t triggered a deep opening dip, then later news probably won’t either.[/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.