Market Wrap

[pay]About that close (How the prior session ended)
Wednesday’s last hour was entered testing the 1123.75 bias-up signal. It  was already tested during the noon hour and failed to trigger, and it was too late to ttrigger in the last hour. But its resistance had been chipped away. And the last hour wasn’t likely just to range narrowly into the close.

Whether price firmed or rallied to fresh session highs is not as relevant as the probe’s failure to close above the morning’s 1125.25 high. Buyers gained no traction for their efforts, and there is no requirement to trade any higher.

Pattern points (And technical influences)
Tuesday’s close at 1118.00 combined with it being tested at so many other relevant timing windows, that equilibrium was signaled for Wednesday morning. In fact, there were three wide swings to support, to resistance, and back again.

This included Wednesday morning’s rally to the 1125.00 bias-up target that reacted back down through the 1120.50 bias-up signal. And this is the third rejection of morning bias parameters in a week. Such polar opining tends to accompany major turning points.

The 3:10-3:20 timing window contained a probe of fresh afternoon highs. It was hardly decisive, so not very meaningful. Any follow-through to higher highs does not have that extra degree of confidence.

Having rejected Wednesday morning’s bias-up parameters, Wednesday morning’s 1113.50 and 1108.50 bias-down parameters will need to be tested. If Wednesday’s late-afternoon breakout attempt has already failed, then a drop to 1113.50 and 1108.50 should follow on Thursday. Not trendingf down Thursday would be interesting ahead of Friday’s news.

Bottom line (My underlying premise)
Wednesday’s late rally suggests the ADP surprise – and ultimately holding its gain – is being extrapolated into Thursday’s scheduled jobs data. And that suggests optimism is getting more excessive, and unsustainable. The reaction to Thursday’s reports will help to shape the likely path for Friday morning’s Employment Situation report. [/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)
Tuesday’s last hour dragged down to fresh afternoon lows at 1114.50. But it wasn’t due to breaking 1118.00 support, which didn’t break under after the last hour had begun. And it wasn’t due to the 3:10-3:20 timing window, which did trend down, but not to fresh afternoon lows until after consolidating. And it wasn’t due to RSIs, since 1-minute was diverging positively.

Without any distribution, reaction or deterioration to justify the dip, it was recovered. The close found itself attracted right back to the relevant 1118.00 level.

Pattern points (And technical influences)
The morning’s wild swings happened early enough that there was ample time to absorb their shock to the system. The last hour’s trending attempt had an open door to extend. That it did not, and that it bounced sharply from testing support, suggests that more volatility is coming before trending begins.

But Tuesday’s close at the relevant 1118.00 level does represent equilibrium. Like Friday’s close that ended while testing the equally relevant 1108.50 level, only a sufficient gap up or down can avoid choppiness Wednesday morning. This is essentially either a gap up above 1123.00, or under 1113.00. Anything less pronounced would likely reverse back and forth between positive and negative territory until the noon hour.

Monday’s pattern was likely to produce fresh highs Tuesday. Still holding the 1118.00 area at Tuesday’s close does leave the door open to a fresh high Wednesday. This still is not required, and won’t be, but a fresh high during Wednesday morning’s ranging could produce a downleg in the afternoon.

Bottom line (My underlying premise)
Sellers could have taken control Tuesday afternoon, but did not. That isn’t bullish, but it does suggest there may be some unfinished business above that must be neutralized first. I’m willing to sell a deep enough opening beak, but otherwise there is still some potential to probe higher highs. And in that potential there is always more potential for buyers to gain traction.[/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)
Credible late-afternoon trending needed to start when the no-bias environment lapsed, if it wasn’t already underway. It was already underway, recovering from testing the 1118.00 area thanks to impatient buyers. The last hour only ranged sideways, testing the pattern’s 1124.00 target .

Pattern points (And technical influences)
The close dipped back down to the morning’s 1121.75 high, so buyers didn’t gain traction for their effort. And it was quite an effort – gapping up and extending higher, printing session highs in the last hour. Except for Friday’s action not predicting it, Monday’s pattern was “session-long trending.”

Fresh highs in the last hour of a session spent exclusively in positive territory tend to be retested. So, an overnight dip that greets Tuesday’s open from negative territory might be a compelling long-entry. Although a firm open would already neutralize that bullish potential, it wouldn’t necessarily be a sell setup.

Regardless of intraday fluctuations, the bigger question is whether the rally’s 1108.50 and 1118.00 targets are being exceeded. Monday did finish higher, but not cleanly – the session’s midsection ranged around 1118.00 up to 1121.75, which was still being tested at the close. The lower-end of that range was 1117.50, and closing under it would signal 1118.00‘s test had held again.

Bottom line (My underlying premise)
Without a qualified breakout above 1118.00, there is no unfinished business above. Higher highs intraday would be entertaining, but would not assure closing higher. With the recent string of positive reactions to econ reports, and with plenty of data points coming Tuesday morning, we’ll see whether sellers have accepted the burden of proof.[/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)
Friday afternoon’s rally peaked upon testing 1103.50. That’s where Thursday afternoon’s test of 1099.00 had peaked, instead of the rally gaining traction. But 1103.50 held as resistance Friday, again preventing buyers from gaining traction for the effort. Sellers didn’t gain traction either.

Pattern points (And technical influences)
The 3:10-3:20 timing window extended to fresh afternoon highs, suggesting that the closing dip refueled buyers, and didn’t gain traction. Meanwhile, the day ended at or around the relevant 1099.00 level to suggest an equilibrium close. That usually produces two consecutive trending attempts, one in each direction, both failing.

Equilibrium can be overcome by gapping open beyond the range, which is defined as 1093.00-1103.50. That doesn’t preclude the open from firming to and through 1103.50 on the way to 1108.50. In fact, just recovering 1102.00 through the bias window would suffice. But that path would likely reverse back into negative territory.

1108.50 is Friday’s bias-up target, whose test became likely since the open recovered by 10:15 from testing the bias-down parameters. The entire bias timing window through 10:15 developed in negative territory, or else 1108.50‘s test would have been required.

At least two objectives remain outstanding below. Oversold resistance at the 1090.25 afternoon low, and the 1086.50 opening gap. Support at 1093.00 has been chipped away substantially, but one last probe under it in an equilibrium environment could still recover. The second test, probably not.

Bottom line (My underlying premise)
It is amazing that Friday’s open recovered from probing both bias-down parameters, since this same setup (absorbing bias-up parameters) defined Thursday’s open. If nothing else, it speaks to this week’s messiness, which I suspect reflects how big of a top is forming. Unless Monday’s open were to gap down, and likely extend, there’s probably a little more messiness ahead.

[/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)
Thursday’s last hour ended an afternoon rally that had retraced nearly all of the morning’s losses. The close was between 1093.00 and 1099.00, prior lows and prior highs, respectively. Sellers were robbed of their traction, while buyers were prevented from regaining it. But damage was done, failing another test of prior highs while chipping away at support.

Pattern points (And technical influences)
The consolidation at Thursday’s lows formed a Symmetrical Triangle. Its highest calculable target – a 261.8% extension – defined the afternoon’s 1103.50 high. RSIs diverged on its retest, triggering the reversal into the close.

Symmetrical Triangle’s tend initially to break falsely in one direction, before reversing back into the pattern. Often the false break is in the wrong direction, and occasionally the break is only premature. But the breakout is typically retraced, and Thursday’s late drop extended overnight to the afternoon upleg’s 1090.00 origin.

The opportunity was missed to close under 1093.00 and to maintain sellers’ traction. Now sellers can regain traction by closing under the 1088.75 low of 1093.00‘s test. This being a Friday, any sell-off underway that targets a break under 1088.75 would be credible for resuming the decline. By the same token, closing above 1093.00‘s test would give buyers traction.

Bottom line (My underlying premise)
Having chipped away at the natural support of “lower prior highs,” a break maintained under 1093.00 would be much likelier to extend down. Trying to extend down, but failing, would therefore be bullish for next week. Sellers may be better served by not trying to retake control Friday, so any attempt had better succeed to avoid trapping shorts.[/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.