Market Wrap

Another gap up rejected, at least through the morning. This area acts like the Bermuda Triangle, where rallies disappear and nothing seems to take their place. But this ranging is likely to try at least a head-fake soon.  [pay]

Pattern points… (Setups and technicals)
Thursday’s reaction to Jobless Claims spiked up to the morning’s 1187.50 bias-up signal. Thursday’s 10:15 bias timing window was exited under the 1182.50 bias-up signal. Rejecting both bias-up parameters puts into play tests of both bias-down parameters. The 1173.50 bias-down signal was tested at the session low.

Thursday’s 1166.50 bias-down target’s test remains outstanding, perhaps because the bias-up signal wasn’t tested during regular trading hours. Its rejection wasn’t as impressive. Regardless, Wednesday’s lows stopped just ticks short of touching last Thursday’s 1167.25 prior low. Its test is likely, and likely to include 1166.50.

Thursday’s cash session close equated to 1179.75. The closing bars easily overlapped Wednesday’s 1178.75 close, as did last Friday’s (all circled orange). The two interim session closed 1 tick either way of 1182.25 (circled purple). In fact, the last two weeks have gravitated noticeably back to the 1180.00-1182.00 area (highlighted yellow).

Perhaps with next week’s election and FOMC meeting looming – not to mention this weekend’s illiquidity – this market seems to have found comfortable ground. But that hasn’t stopped trending attempts.

What’s Next… (Outlook and opportunities)
The two-week long reversion back to 1180.00-1182.00 already makes trending difficult to gain traction. This being a Friday only compounds the restraint. Intraday trending all but requires immediately breaking beyond the 1181.00-1174.00 range. Without an early break, the balance of the day would bounce around between 1171.00-1189.00.

Simulator update: I tested the simulator platform (DOM) Thursday to be displayed in the chartroom. It is taking up too much space, so I am testing different resolutions that keep the chart legible. I had hoped to take this live in the chartroom Thursday afternoon, and will keep you updated here – I’ll still need feedback from everyone concerning its display.

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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.

Cut down in its prime, and then again later… Wednesday’s session-long decline setup controlled the morning, but the afternoon controlled it. Regardless, it remained influential, if inverted. The change in its resolution suggests bigger shifts underway.[pay]

Pattern points… (Setups and technicals)
Wednesday’s gap open under Tuesday afternoon’s low triggered a “session-long decline” setup. It has a high probability for printing its session low during the last hour, often ticking down into the close. Exceptions don’t simply range sideways, but invert and tick higher into the close. Wednesday’s setup clearly inverted by recovering 1173.00.

The 1167.75 low stopped just short of touching last Thursday’s 1167.25 prior low. It was expected to recover any intraday probe anyway, since closing under it would have signaled the trend reversing down. A trend reversal wasn’t likely in the context of a pre-FOMC pullback.

But impatient buyers prevented probing 1167.75. Coming within 2 ticks of touching it does not complete a test, so its eventual retest is likely. And if the current bounce is any more productive first, then 1167.75‘s eventual retest as support will likely fail.

First things, first. The session-long setup tends to extend its closing trend into the following session, regardless of its initial direction or its eventual resolution. Patterns in-play Wednesday afternoon are targeting 1182.50. And since Wednesday’s session-long decline never did turn positive, buyers never did gain traction.

What’s Next… (Outlook and opportunities)
Gapping up is the only way to maintain higher prices Thursday. So, extending higher without first gapping up would be vulnerable to reversing down intraday, presumably from testing 1182.50. The initial objective would be to actually test 1167.75, and any lower would next target 1160.00. There is no unfinished business above, so extending above 1182.50 would have little resistance along the way to fresh highs. [/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.

Another round-trip to the precipice and back… It would seem the invisible hand saved us again from going over the edge… Or, is that what they want us to think? Back in the day, this setup would have squeezed the market back up to the highs before lunch (shorts being the main course). Somebody’s slipping…

Pattern points… (Setups and technicals)
Monday’s hold short through the close under 1183.00 produced its 1174.00 target at Tuesday’s open. Recovering 1179.00 through the first half-hour sealed the session’s low. It also made the pattern vulnerable to a squeeze. The only rally it produced barely filled the gap back to Monday’s close.

The balance of the day ranged between 1178.00-1183.00. Consolidating into and out of the noon hour was even narrower (circled red), and isolated to the range’s upper-end without extending higher, i.e. “ineffectual optimism.” A drop back down to 1178.00 offered another opportunity to squeeze shorts. Once again, price only climbed back to session highs.

A nominal fresh high up to 1183.75 through 3:10-3:20 never gained traction (squared red). It reacted down 3 points, well back into the range. It recovered, after the position-squaring window, and after the cash session close. Tuesday morning’s 1188.50 bias-up signal and 1194.25 bias-up target were undermined by never recovering positive territory. Their objectives would be reinstated if any bias-up were triggered.

What’s Next… (Outlook and opportunities)
Buyers gained no traction from Tuesday’s borderline “ineffectual pessimism.” And that means the only way to advance higher is to gap up. Tuesday’s 1188.50 and 1194.25 bias-up parameters would be in-play. Otherwise, almost any failure to recover positive territory through Wednesday’s open would resume the drop underway since Monday morning’s high.

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.

Is that a breakout in your pocket, or, oh. Happy to see you, too…  An initially bullish reaction to the weekend’s G20 meeting failed to attract more buyers. It had more than its fair share of optimists (described in Monday’s First Trade). Ineffectual optimism. Gap up, new high, entire session spent in positive territory, but close under prior highs. That’s a lot of buying pressure to expend without gaining traction. [pay]

Pattern points… (Setups and technicals)
Monday’s opening gap (squared red) was within a couple of ticks of Thursday’s prior high, so it did not require being filled. Nevertheless, it was. After dipping back under the prior high, a bounce probed it as resistance. Any attraction above that it might have had was neutralized.

The overnight high’s 1193.00 “new Globex trend extreme” was retested intraday, neutralizing its attraction above. The ~1186.25 prior high (circled green) held as resistance through the close. This signals momentum at least trying to reverse down. Sellers get a benefit of the doubt

It does not signal the trend reversing down, which would now require closing under Thursday afternoon’s 1167.25 prior low (circled red). But unlike the two previous prior lows, buyers did not gain traction during its recovery.

1183.00 either failed as support at the close, or it was still being tested. Regardless, it was its second test, which was suspicious if a recovery were underway. Support at the two “lower prior highs” (highlighted red) is tenuous, at best. Breaking lower would be credible for extending down in that direction.

What’s Next… (Outlook and opportunities)
Monday’s close was a rare opportunity for holding short through the close. That is, the likelihood was greater for gapping down than for gapping up. Buyers had not gained traction for the third consecutive session, and two gaps up had made no net intraday gain.

Weakness overnight or Tuesday morning will try to find support at Friday’s 1179.00 lower prior highs. A break under Friday’s 1176.50 prior lows could snap back – at least once – if the break were not maintained through a relevant timing window.

Getting through Friday’s prior lows would require serious selling pressure, or the absence of serious buying pressure. In either case, the environment would be changing. It probably is already, unless 1188.00 were recovered by and/or through Tuesday afternoon.[/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.

Wake me when it’s o- oh, okay… We knew Friday’s pre-open surge and its opening gap up would be rejected. But it was surprising by how little. Were sellers saving their big guns for the new week?[pay]

Pattern points… (Setups and technicals)
Friday’s pre-open surge failed just 1 tick short of the 1181.25 bias-up signal. The post-open surge stopped 2 ticks short. Neither peak was sufficient for putting into play a test of the 1172.00 bias-down signal. In fact, the balance of the day ranged very narrowly until the close.

Despite spending the entire day in positive territory, Friday’s narrow ranging confirms that Thursday’s late-afternoon bounce did not gain traction. This was signaled by only retracing the early-afternoon’s drop. Counter-intuitively, gapping up Friday instead of trending higher was actually further confirmation that buyers had not gained traction.

Similarly, Friday’s last-minute surge from 1178.00 to 1181.50 was just another marker. Delayed trending is sponsored by weak hands, who are bullish in this case, which is bearish from a contrarian perspective.

What’s Next… (Outlook and opportunities)
Friday’s last-minute surge finally neutralized any attraction to retesting the 1181.00 pre-open high. There is no unfinished business above to attract price up at Monday’s open. This doesn’t equate to being a sell signal – there was no unfinished business above after Thursday’s close, yet Friday hardly looked at turning negative.

Early strength should be rejected early upon testing 1184.00-1187.00 if sellers will regain control intraday. Delaying a reversal down for too long would encounter much support from Friday’s narrow extended ranging around 1177.00-1178.00.

After surging into Friday’s close, gapping down Monday under Friday afternoon’s 1176.25 low would trigger a “session-long decline” setup. A gap down would leave no unfinished business above.[/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.