Market Wrap

Late breaking news? Friday morning’s bias-down left outstanding its 1327.25 target. It was fulfilled at the post-close low, erasing the 12-point mid-day rally to 1340.25. It’s either a function of expiration’s weirdness, or else the bigger underlying influences are winning out. [pay]

Pattern points… (Setups and technicals)
The morning’s bias-down signal triggered under 1335.00, targeting 1327.25, which was attacked to within 1 point at the morning’s low. RSIs diverged positively there to signal that sellers had lost momentum. No kidding, the interim bounce eventually retraced all of the post-open drop back up to 1339.00-1340.00.

But when the morning’s bias environment had lapsed, its 1335.00 bias-down signal was not recovered. So, the 1327.25 target remained outstanding, nonetheless.

Despite the afternoon recovery to the pre-open selling zone around 1340.00, the balance of the session trended down relentlessly. The cash session’s close equated to 1331.00, whose break earlier would have resumed the decline, but the noon hour’s dip stopped 1 tick short of touching it. Futures ticked down relentlessly as was expected for an expiration close. Its 1327.00 low fulfilled the target.

Fulfilling a target means that its selling pressure is fulfilled. It does not mean that sellers have lost traction. So, it does not mean that buyers have gained traction. Meanwhile, a target’s selling pressure is vulnerable to extending. Regardless, fresh lows are likely Monday since RSIs were oversold simultaneously at Friday’s low.

Unless Monday’s weak open were quickly recovered, Wednesday’s expiration signal – which suggested that the holding a test of the range’s 1340.00-1341.00 upper-end had created an attraction back down to 1316.00-1319.00 – will be fulfilled without further delay.

What’s Next… (Outlook and opportunities)
The bearish path can be avoided by gapping up above Friday’s highs, above 1340.00-1341.00. Otherwise, the open is vulnerable to gapping down sharply, perhaps even to or through 1319.00. Regardless of the path down, failing to hold 1316.00-1319.00 would put into play 1299.00. [/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.

Breakout, or not breakout… That is the question. If the 1340.00-1341.00 was truly recovered Thursday, then the rally should resume Friday without delay. But if 1340.00-1341.00‘s resistance actually held…. [pay]

Pattern points… (Setups and technicals)
Recovering 1340.50 into Thursday’s last hour could have extended to 1346.00. An errant tick pierced it several minutes later, but there was still time to trigger it by 3:10-3:20. When that window shut, price finally extended higher.

Although price gradually rose to 1342.25, the extra gain came during the position-squaring window. So, buyers didn’t gain any traction for their effort, and 1340.00-1341.00 was still being tested through the close.

Friday’s expiration is already influencing price action. If its influence intends to restrain trending, then Friday’s post-open action should not trend. Its open may gap up or down, but post-open action should range narrowly.

Not clearly recovering or rejecting 1340.00-1341.00 didn’t resolve the Wednesday expiration signal. But by the same token, not immediately extending above 1340.00-1341.00 on expiration day would suggest the range’s upper-end had held.

What’s Next… (Outlook and opportunities)
Expirations are difficult to trend at all, if not trending early. Expriations are also difficult to stop trending that begins early. So, Friday morning’s bias signal tends to persist through the noon hour. [/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.

Wednesday’s expiration indicator could have signaled a bottom… but it might be signaling a top. Retesting the decline’s target could have held to form a solid bottom. Has impatient buying trapped longs, instead? [pay]

Pattern points… (Setups and technicals)
Both of Wednesday’s bias-up signals triggered, and each fulfilled its target, despite my suspicions for each. The suspicions were based on the last-minute timing of each trigger. Sponsorship for the rally was lacking, but sponsorship for the decline lacked more.

Typical of the rally’s weak sponsorship, Wednesday’s closing bars repeatedly overlapped the afternoon’s 1339.75 bias-up target.  Its first test two hours earlier had also held, accompanied by overbought RSIs. Its reaction down down to 1334.75 was recovered without RSIs returning into overbought territory.

Was the rally just expiration related? The same would have been assumed had a probe of fresh lows been recovered. And a rally would have been signaled.

Having tested prior highs, instead, expiration might be biased down. Holding a more thorough test of 1340.00-1341.00 prior highs would have been more credibly bearish. Meanwhile, almost any failed probe of fresh highs Thursday, or aggressive selling, would prevent bouncing further into expiration.

What’s Next… (Outlook and opportunities)
Gapping down or spiking through  1334.75 would be credible for being a late rejection of 1339.75. Any shallower weakness would likely recover to probe a fresh high. And fresh highs have room up to 1343.00 without signaling a bigger rally underway. Three high-profile econ reports are released simultaneously after Thursday’s open, so any initial trending will likely either accelerate or reverse 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.

What a volatile day… and what a flat close. The overnight bounce retraced back to overnight lows, and then lower, testing this leg’s objective. Closing unchanged only means sellers didn’t gain any new traction, since buyers didn’t gain any traction. [pay]

Pattern points… (Setups and technicals)
it may see like sellers sponsoring the decline netted nothing for their efforts since Tuesday’s close was essentially unchanged from Monday. But sellers did chip away at support. Despite holding a test of the decline’s 1319.00 objective (probed by 3 points), buyers didn’t exploit the decline’s hesitation.

A retest of 1319.00 is likely, whether overnight or intraday (normally intraday). Fresh lows under 1316.00 are not required, but recovering from so thorough a retest would be more bullish. And this deeper retest would not diminish the potential for an afternoon rally.

No fresh afternoon lows Tuesday disqualifies the pattern from being “ineffectual pessimism.” So, no immediate rally is signaled. However, an immediate rally could test 1334.50-1336.00 without a bigger rally gaining traction. Any higher would likely be tied to some sort of news, and therefore steep and potentially substantial.

What’s Next… (Outlook and opportunities)
An overnight dip to 1319.00 or lower could signal its recovery already underway back above 1322.75. Rallying first through 1331.00 could extend up to 1336.00 before resuming the decline to 1319.00, and perhaps much lower… This being expiration week, holding a retest of 1319.00 or breaking it would determine trending’s direction into next week. [/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 low is dead, long live the low… The only requirement for the current decline has been to retest last Thursday’s 1325.25 prior low. Done. There are reasons for the retest developing into something much bigger. And there is a small window available to avoid it.[pay]

Pattern points… (Setups and technicals)
1325.25‘s retest was the decline’s only requirement, and it is now neutralized. But the two extra tests of last Thursday’s interim high refueled sellers for something more substantial.

Also, the prior low wasn’t tested until the session’s final minutes. Such a late retest of a prior extreme generally doesn’t ultimately hold. Finally, each low shared a similar “V” character, and two “V” bottoms do not a durable bottom make.

Since the minimum objective was met and held, it is possible that near-term selling pressure has been flushed out. This would open the door for another bounce to further refuel sellers. But not bouncing into Tuesday’s open would likely mean gapping down sharply – i.e. trending down overnight.

Monday’s close ended by bouncing slightly despite probing fresh lows. Buyers didn’t gain traction. The 3:10-3:20 window could have formed a bottom by recovering from a dip, but optimism prevented even is attempt. These factors suggest more selling pressure in reserve.

What’s Next… (Outlook and opportunities)
In fact, S&Ps spiked down 6 points to 1320.50 at 4:30 while finishing this post. The market-on-defense mode became obvious by Monday’s  close, so it should become more obvious through Tuesday’s open. Recovering 1335.00-1336.00 through a relevant timing window could suggest another rogue detour forming. But it would still be all about refueling sellers. [/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.