Market Wrap

[pay]About that close (How the prior session ended)
The noon hour’s bounce was ultimately defined by hesitation to actually touch its 1140.00-1141.00 target. That pessimism undermined sponsorship of a dip to 1135.25. Its recovery sliced through the target to 1141.75, but positive territory pushed back. The close slid back to 1135.25.

Pattern points (And technical influences)
Thursday morning’s tests of the 1144.00/1150.25 bias-up parameters held up through 10:15 to avoid signaling no-bias, and through 10:30 to avoid invalidating the bias-up. The morning’s drop was a “bias-up downtrending” that required being retraced.

That requirement would be neutralized by exiting the bias environment at 11:30 under the 1136.00 bias-down signal. It was being tested at 11:30, and at noon, but not clearly broken. And it was still being tested at the close, despite multiple probes below it intraday. Sellers could have rejected the attraction to retrace the bias-up downtrending. They did not.

That’s not a buy signal, but it does keep alive potential for another early rally, or to recover an early drop. The retracement’s objective would be the 1144.00 bias-up signal, or 1146.50 where the 10:15 bias timing window was exited. An overnight rally would qualify, even if already rejected before the open. Recovering 1144.00-1146.50 would be bullish.

Bottom line (My underlying premise)
No low was broken Thursday to signal momentum reversing down. Rejecting the new high and holding a retest of Sunday night’s Globex extreme are not bullish, so the bigger picture remains vulnerable to rolling over. Timing is still relevant, and significant selling pressure Friday would confirm. [/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.

About that close (How the prior session ended)
The morning’s no-bias environment had created the objective to test 1144.50. It was touched just before and after 2:30. The last hour began by plunging 7 points in 15 minutes to 1137.00. It touched 1136.00 30 minutes later. RSIs finally diverged positively to produce a bounce back to unchanged.

Pattern points (And technical influences)
The late plunge probed the afternoon’s 1139.75 prior low after the 3:10-3:20 window had begun. But impatient sellers prevented the 3:10-3:20 window from exiting back above 1139.75. Too bad. That would have provided new bearish context. And it is potentially bullish when sellers fail to exploit an opportunity.

Then the series of lows from 1137.00 to 1136.00 formed three swings that overlapped each other. This pattern is a Running Correction, and it also reflects impatient sellers. Unproductive sellers, too, since they expended a lot of energy just to attack the morning’s low without touching it.

Finally, RSIs improved while testing 1137.00 to 1136.00. Their positive divergence produced a bounce back above the afternoon’s 1139.75 prior low. The drop’s sponsorship was robbed of its traction. Now an immediate drop has room to 1133.50 before gaining traction for a bigger decline.

Wednesday afternoon’s drop was not a new downleg. It expended a lot of energy, but it was still an inside day. A downleg is still likelier to originate Thursday, and possibly not until failing another bounce. Another probe above 1144.00 could probe Sunday night’s high by 1 point up to 1150.75 before failing.
Bottom line (My underlying premise)
Monday morning’s combination of wide range, multiple swings, and quick reversals was amazing. It was all the more amazing for that not producing an explosive rally out of its bias window. Regardless, the action does suggest a major move is getting closer.

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.

[pay]About that close (How the prior session ended)
Tuesday afternoon’s bias environment lapsed while attacking the noon hour’s 1137.50 lows. Two attempts stopped short of actually touching 1137.50. This optimism opened the window for a more dramatic drop, which sellers failed to exploit. The market abhors a vacuum, so it sucked in buyers to produce the opposite: a short-squeeze triggered above 1139.00, to new highs at the afternoon’s 1146.00 bias-up target.

Pattern points (And technical influences)
There was time for 1146.00‘s reaction to dip. The cash session close equated to 1142.75. Futures extended down to 1141.25. In either case, The probe above Friday and Monday’s 1144.50 and 1145.25 prior highs was rejected, costing buyers their traction.

More important is that the prior highs both were probed by a single leg from below. Just failing a probe of prior highs occurs when optimism is excessive – nothing that a little pullback and consolidation or a gap up can’t overcome. But the same leg probing and reversing back under two prior highs speaks to context: buyers aren’t chipping away at resistance, they’re being absorbed.

This context is still not a sell signal. It’s a sell the intraday rallies signal. Another probe of the highs that holds an actual test of Sunday night’s 1149.75 high could launch a more credible downleg. And a test of 1149.75 is likely so long as 1140.00-1141.00 holds as support.

Breaking under 1137.50 would suggest a retest of Tuesday’s 1127.25 low was underway. Simultaneously oversold RSIs there require its eventual retest. And there’s no reason to retest it at this stage of the pattern unless the intent were to break lower.

Bottom line (My underlying premise)
A rejection of new highs would not be inappropriate, nor has it been. A downleg is likelier to begin Thursday, but could be underway into Wednesday’s close. Closing above the 1144.50 area without yet probing Sunday night’s high could reflect enough tempered optimism to keep sellers from gaining traction before Friday.[/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.

[pay]About that close (How the prior session ended)
Breaking more than 2-3 ticks under a productive pullback limit is effectively a sell signal. Monday’s drop at 3:30 broke under 1143.50 by more than 2-3 ticks, and extended down to fresh session lows at 1137.00. The close was still ranging around the afternoon’s 1138.00 bias-down signal, so it was not clearly broken.

Pattern points (And technical influences)
Gapping down Monday under 1140.00 would have trended down. The level is still relevant, but closing under 1140.00 doesn’t trigger a downtrend (1138.00‘s break would have done that). It does, however, add yet another bearish argument. As yesterday’s Trading Plan concluded:

No unfinished business above, but not rejecting a probe of the prior high. Low-volume Friday afternoon, but no pushback off of resistance, ahead of the weekend. The dark side of excessive optimism is fear to sell – in either case, not the stuff of sustained rallies.

Now another prior high has been probed (Friday’s). And this time it was rejected, by closing under the morning’s 1138.50 interim low. More context that rally attempts cannot gain traction in this pattern. But not that rally attempts have ended.

Recovering 1141.00 at Tuesday’s open, confirmed above 1142.75, would target 1149.25 and 1151.25. Tuesday’s 1135.50 bias-down signal isn’t much below Monday’s close, but triggering it could make the difference between trapping more longs, or driving them to the exits.

Bottom line (My underlying premise)
Probing fresh session highs in positive territory Monday afternoon proved the morning’s sellers were weak hands. The problem was that strong handed buyers didn’t fill the void. The market abhors a vacuum, and if one side fails to exploit the window opened for it, then the other side will be sucked through it. It’s another opportunity for buyers to exploit, however temporarily. But not exploiting it Tuesday’s open could once again suck in sellers for another downleg. [/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.

[pay]About that close (How the prior session ended)
The last several minutes of Friday’s session rallied sharply – 6 entire ticks. Not points, ticks. At least, it seemed like a rally, after the numbingly narrow ranging underway since late-morning’s peak.

Pattern points (And technical influences)
Failing to close above Tuesday’s high after probing it would have robbed Friday’s buyers of their traction, if there were any buyers to rob. But they were already expended by 11:00. The gas tank still had fumes, but only fumes.

Even the 3:10-3:20 window couldn’t be bothered to probe either end of the range, each only just 2 points away. Had this not been a Friday, then strong hands would have tipped their hand, but they had stopped participating much earlier.

Strong hands were very much a factor. They had produced Tuesday’s overbought 3-minute RSI at 1144.00, and Wednesday’s overbought RSIs at ~1140.00. Only weak hands remained to sponsor the interim dive to Thursday’s 1117.25 low. Strong hands returned to sponsor the recovery.

Extended narrowing ranges tend to break falsely in one direction before reversing more substantially in the opposite direction. That having been said, a spike up at Monday’s open could extend higher – albeit at a much more gradual pace – through Tuesday afternoon.

Reversing down Monday depends largely upon either quickly rejecting a spike up, or simply maintaining any immediate break below 1140.00. Even in the latter case, a drop may be limited only to retesting Friday’s 1133.00 opening print, and not necessarily extending down.

Bottom line (My underlying premise)
No unfinished business above, but not rejecting a probe of the prior high. Low-volume Friday afternoon, but no pushback off of resistance, ahead of the weekend. The dark side of excessive optimism is fear to sell – in either case, not the stuff of sustained rallies. [/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.