Market Wrap

Is the 3-day weekend indicator alive?… Wednesday’s close indicated that trending was unlikely or unsustainable. So, trending on Thursday and Friday is not the product of strong hands. Will they correct the correction upon their return?[pay]

Pattern points… (Setups and technicals)
Friday’s rally fulfilled the 1333.50 bias-up target. But the bias-up signal wasn’t recovered in-time to trigger. And closing under the morning’s high, basically unchanged from the 1328.75 open, means buyers didn’t gain traction. The market gained no ground beyond its gap up.

Wednesday’s 3-day indicator already said a rally’s sponsorship would be weak hands. That would explain why the intraday pattern suggests buyers didn’t gain traction for their efforts.

The signal’s minimum requirement could have been to close back into 1312.00-1320.00 range Thursday. Failing that, it could have required closing down to the range’s lower-end Friday. Avoiding both by extending higher into the weekend now creates the potential, if not the likelihood of trading to the range’s lower-end.

How about through the range’s lower-end? The performance must now compensate for the delay by dropping aggressively, and by targeting any unfinished business below. That is at least a retest of last Tuesday night ‘s 1302.25 overnight low. Maintaining a gap up Tuesday would offer a path higher, being the only way to rally when intraday buyers haven’t gained traction.

What’s Next… (Outlook and opportunities)
Sunday night’s Globex action will lack the same liquidity that allowed weak hands to rally Thursday and Friday. The rally could extend higher. But any probe of 1337.50 should hold, if 1337.50 were touched at all. Pullbacks have room down to 1325.25 before the rally’s momentum would be jeopardized. Back under 1323.00 and 1320.50 would signal and confirm momentum reversing down. [/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 a rally forms in a low-volume environment… can it gain traction? Already having neutralized all attractions above, momentum had better be enough to extend higher, or else there’s not much support below.[pay]

Pattern points… (Setups and technicals)
Thursday’s last 90 minutes can be characterized as ranging sideways around Wednesday’s 1324.50 prior high. That would excuse the 3-day weekend signal from not having sucked price back into the 1312.00-1320.00 range.

Last Thursday’s choppy ranging around 1340.00-1341.00 resistance was similar, creating pent-up selling pressure and then compensating for the delay by sliding into Tuesday’s night’s 1302.25 low. Thursday morning’s extended consolidation under 1316.00-1317.00 also created pent-up buying pressure, but that already played out intraday.

Immediately sliding or gapping down Friday could do by proxy what Thursday’s close failed to do, reverse back into the 1312.00-1320.00 range. Compensating for the delay would suggest extending down to the range’s lower-end, if not also lower.

Extending higher is possible, but less likely since the opportunity was not exploited through Thursday’s last 90 minutes. That was  plenty of time to put into play higher targets, or else to react down and refuel buyers, but neither was done. Extending hgher overnight may be the only way to avoid a downleg back into and through the 1312.00-1320.00 range.

What’s Next… (Outlook and opportunities)
Look for volume – what’s left of it – to start evaporating quickly by late-morning. The econ calendar is treacherous, and should keep the open lively. Trending after that will be difficult, especially if not already underway. [/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.

What a difference 3 minutes can make… Wednesday’s late break higher came a little too late to be the product of durable sponsorship. Its complete retracement wasn’t surprising, but the swiftness was.[pay]

Pattern points… (Setups and technicals)
Wednesday’s midday consolidation failed to probe fresh afternoon highs into the session’s last hour. That didn’t prevent a 4-1/2 point surge up to 1324.50 from starting just 3 minutes later. But launching too late kept the surge from holding. And the close slid 8-1/2 points to close at 1316.00.

Overbought RSIs at the high made the pattern vulnerable to dropping. The technicals setup should also make the drop temporary – at least to retest the 1324.50 high. Its retest would be moot if Thursday’s open extends down under 1316.50, Wednesday afternoon’s last relative low which was still being tested at the close.

Meanwhile, the three-day weekend indicator expects sideways ranging through Friday morning. This is because there was no break above or below the 1312.00-1320.00 range that greeted Wednesday’s open. Wednesday probed both ends before closing back within the range.

What’s Next… (Outlook and opportunities)
Thursday’s open could still signal trending by maintaining a gap above or below the 1312.00-1320.00 range. In other words, do what Wednesday didn’t, without hesitation.

Otherwise, trending could still be attempted Thursday and Friday – and probably will be. It’s just unlikely to gain traction from probing beyond Wednesday’s 1302.25-1324.50 range. For example, an early retest of overbought RSIs at Wednesday’s 1324.50 high would likely reverse down to the range’s lower-end, if not to Wednesday’s overnight lows. [/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.

Fourth time’s a charm? Sunday night’s drop eventually produced a bounce that was fully retraced at Monday’s open. Its low was retested a couple of times Tuesday afternoon, too. Look out below if this latest test doesn’t hold. [pay]

Pattern points… (Setups and technicals)
Several opportunities to rally were rejected Tuesday. Rejecting the open’s bias-up was the most glaring. A close second was the afternoon’s missed short-squeeze. Each produced sizable drops as a consequence. The morning’s drop was already documented, breaking back under the bias-up signal through 10:30. The afternoon failed rally was equally interesting.

A “pivotal uptrending support” had formed from connecting the 1312.25 pivotal low (the low prior to the 1311.75 actual low) with the1314.00 key low (the low following the actual low) – they’re boxed in red. The resulting green-dashed trendline allows two more tests as support, which are circled green.

The third test – circled red – isn’t so charming. It is all but assured to reverse momentum down. And since the trendline is a proxy for the pivotal low, its complete retracement becomes only a formality. It was largely retraced before the close, and then fully retraced minutes later.

Oversold RSIs at Tuesday afternoon’s low doomed any bounce to failure. In fact, a 2-1/2 point bounce to 1314.50 already fell 3 points to fresh lows. RSIs weren’t so oversold at that low, but there was no bullish reason to yet again revisit the 1312.00 area.

What’s Next… (Outlook and opportunities)
1312.00 has already produced bounces from before and after Monday’s open, then earlier Tuesday afternoon. It might produce another Wednesday, or perhaps recover from an early dip. But failing to hold its support through the open would suggest the 1299.00 target was in-play.[/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.

Hurry up! And wait… Sunday night’s slide to new lows didn’t extend intraday. But neither was it recovered, making lower lows likely. [pay]

Pattern points… (Setups and technicals)
Monday’s choppiness was unusual, and the morning was filled with several false starts at resuming the decline. Ultimately, a 9-point mid-day rally stretched the rubber band tightly. The afternoon’s probes above 1319.00 would have snapped back down harder at the open, but the snap back down is still underway at 1314.00.

Although sellers didn’t attract any new sponsorship to extend Sunday night’s decline, neither did buyers. And since no relevant support’s test reacted up above a relevant resistance (like 1319.00), the burden of proof is on buyers.

RSIs never probed oversold territory, so sellers never broke a sweat. What few overbought probes there were eventually diverged negatively, leaving no unfinished business above.

Extending the decline Tuesday down to 1307.00 or to 1299.00 could complete the decline’s next leg. That’s big support with a three-day holiday weekend impending. Bouncing first would only refuel sellers for a much bigger slide, which would be signaled anyway under 1299.00.

What’s Next… (Outlook and opportunities)
1316.75 was the last productive bounce limit of Monday afternoon’s 6-point slide. It became productive upon testing 1314.00. There is no bearish reason for revisiting 1316.75. The decline would require a new distribution pattern to form, and to trigger.

Meanwhile, revisiting 1316.75 would be exposed to buyers gaining traction for a bigger bounce. A bounce has room up to the 1319.00 area.  Gapping up any higher would trigger a “session-long rally” setup.

Otherwise, the decline’s momentum remains intact. Breaking under 1312.00-1313.00 through any relevant timing window could extend down to 1299.00 before the close.[/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.