Market Wrap

Fridays often get one shot at changing the trend… Friday’s opening strength stopped pessimistically short of probing prior highs. It barely touched resistance, but touched it long enough to trigger no-bias. Sellers didn’t exploit the opportunity – not by much, and not for long – so they were marginalized for the day. [pay]

Pattern points… (Setups and technicals)
There is “unfinished business below” at 1351.75. It was the morning’s bias-down signal. The open’s high barely touched the 1358.75 bias-up signal before triggering no-bias, which put it into play. Recovering 1358.75 through the bias environment lapsing would have invalidated the 1358.75 objective. But 1358.75 was still being tested through noon, so 1351.75 must be tested eventually.

1358.75‘s attraction Friday was interesting. Every timing window touched it, including the position-squaring window. A higher high was probed between each touch. This action thoroughly discredited upside momentum. In fact, the cash session’s close was under the noon hour’s high.

So, a post-close 4-point surge up to 1363.75 is doubly interesting. Originating after the cash session close means it is not predictive. The timing also means its immediate rejection at Monday’s open – gapping down under its 1358.75 – wouldn’t require its retest.

What’s Next… (Outlook and opportunities)
New highs be damned, there was no interest in being short through the weekend. That sort of extreme sentiment tends to accompany trend extremes, or at least begins their formation. So, 1363.50‘s post-close test is interesting because it is the next higher objective above 1353.25, which barely triggered Thursday. Holding its test again through Monday’s open, or simply extending under 1352.25, would be bearish. Recovering 1363.50 through a relevant timing window would be bullish. [/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.

Getting over the hump… Wednesdays are normally referred to as “hump day,” for being midweek. Thursdays are a big hump day for a trend. Like a session’s last hour, trending into the week’s last day is difficult to reverse before the weekend. But Thursday’s session didn’t actually trend…[pay]

Pattern points… (Setups and technicals)
Wednesday’s close left the potential for a correction down to 1346.00. That didn’t prevent a detour overnight to new highs. But a drop from 1356.25 did reach 1346.75 before the open.

Positive territory above 1351.00 was recovered through the open. So, despite the 9-1/2 hour, 9-1/2 point drop, the cash session never really experienced the correction. And each of three separate intraday thrusts above 1351.00 was retraced. So the cash session almost didn’t experience a rally, either.

A fourth thrust higher into the last hour did reach new highs at 1358.50. But it came too late to be durable, still holding earlier highs through 3:10-3:20. The surge began just minutes later, and was then retraced into the close back under Wednesday’s high to 1356.50 and 1355.00. It was retraced to 1354.00 at the Globex open.

Excessive optimism delayed the correction after Thursday’s close (detouring first to new highs). Excessive optimism limited the correction to overnight activity. A excessive optimism prevented each intraday pullback from turning negative. Trying to rally on excessive optimism finds buyers depleted just when they are needed most. Thursday’s momentary new high offered a glimpse of the consequences.

What’s Next… (Outlook and opportunities)
There is no unfinished business above. Wednesday night’s “new Globex trend extreme” was probed late Thursday, and then rejected. Thursday’s late surge also probed and then closed back under Wednesday’s intraday highs. Gapping down Friday under 1351.00 could take on plunge-like dimensions. Not gapping down could range sideways into 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.

A star is born… Bernanke’s answers were much less entertaining than the questions. While reporters set a precedent for broaching certain topics, Bernanke set only one precedent, and I’m not sure whether it was unintended – the market rallied sharply when he finished speaking.[pay]

Pattern points… (Setups and technicals)
Wednesday morning’s 6-point drop down to 1340.25 was relatively substantial. But it never behaved as if sellers were gaining traction for their effort. Recovering the morning’s 1346.00 high all but ensured that buyers would be rewarded for having absorbed the selling pressure.

They were rewarded by meeting the rally’s next higher target at 1353.25, which was tested up to 1354.25.

Buyers didn’t gain traction for their effort. The target was neutralized during the position-squaring window, and the position-squaring window was entered and exited at 1352.50. A similar setup at Tuesday’s high produced a 6-point pullback.

That drop was recovered. A similar drop to 1346.00 would also likely be recovered. Especially since overbought RSIs at Wednesday’s 1354.25 high created the requirement to retest it.

What’s Next… (Outlook and opportunities)
New trend highs in a session’s last half-hour just don’t suddenly launch new downlegs. Recovering to retest Wednesday’s high from a pullback down to 1346.00 could complete a top, if the retest of Wednesday’s high were rejected. Otherwise, closing under 1339.50 would be the earliest indication of 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.

That took long enough… The on-again, off-again, rumored, fabled and much anticipated retest of February’s high is finally done. Perhaps not quite finally, but presumably. It will be final if the current upleg proves to be only a retest of prior highs, and not a new rally. [pay]

Pattern points… (Setups and technicals)
The 1339.50 target was met, and then exceeded through the timing window that tested it. There was room for noise above it to 1346.00. That held after being pierced by 1 tick.

1346.00 was tested between the morning’s bias environment lapsing at 11:30, and the afternoon’s bias environment beginning at 1:20. The timing window was exited at 1343.00, and also exited there. So, not only did the window’s buyers neutralize buying pressure by fulfilling the target, but they also gained no traction for the effort, despite closing at new highs.

None of which is a sell signal, only the basis for a bearish resolution. That has yet to be triggered. Higher highs could be probed while waiting for sellers to gain traction. Or, a new accumulation pattern could target new highs.

What’s Next… (Outlook and opportunities)
Optimism is extreme ahead of Wednesday’s weighty FOMC event (see more discussion in the econ calendar). Buyers didn’t gain traction Tuesday, so a higher close should require gapping up. Probing new highs intraday without having gapped up could react down precipitously. Sliding without delay could be productive, but probably not immediately durable coming one day after a new high 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.

Deja vu, all over again? Trading this close to the highs, on this little volume, with so little volatility… What could possibly go wrong?[pay]

Pattern points… (Setups and technicals)
Monday offered another afternoon of narrow ranging. This time, 1331.00 defined the midpoint, vs. 1332.75 Thursday afternoon, and Sunday night.

“Midpoint” may not be the right term, so much as “magnet.” Perhaps that makes clearer why entering a relevant timing window either above 1332.75 or under 1331.00 is likely to extend in that direction.

And trending should be aggressive at this stage of this pattern. Gapping up or down becomes likelier, the longer that intraday action is confined within a range.

While a dip remains possible, it’s not likelier than first probing new highs up to 1339.50. Dipping first is likelier to recover for new highs, and less likely to extend down.

What’s Next… (Outlook and opportunities)
Monday’s session tested both of the morning’s bias signals, without triggering either. Gapping up or down is likelier to recover, if not from the opening tick, then during 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.