Market Wrap

[pay]About that close (How the prior session ended)
Support at 1082.00-1083.00 finally gave way into Tuesday’s close. There was no requirement to compensate for the break’s delay, but selling was severe nonetheless. The break eventually probed the pre-open low by 2 ticks down to 1068.50. All following an interim rally to 1094.50.

Pattern points (And technical influences)
Oversold RSIs at the last-minute low introduce a vulnerability to bounce, whose objective might be 1075.00-1077.00. But a bounce isn’t required, because oversold RSIs attract weak hands, and weak hands aren’t participating so late in the day.

Also, recall that there was room down to 1070.00 Tuesday without sellers gaining traction. Tuesday’s close was still in the process of testing 1070.00. Now there is room for noise around 1070.00 down to the gap at last Wednesday’s 1061.00 close. The gap at last Wednesday’s cash session close equates to 1066.25, and could also offer support.

A test of prior lows – 1066.25/1061.00, 1046.00, 1036.75 – is probably a downleg on the way to new lows, and not a Double Bottom. First things, first. There is no unfinished business above, so there should be little or no delay in resuming the decline. Not resuming the decline at Wednesday’s open would suggest another run at last week’s highs.

Bottom line (My underlying premise)
Wide ranges, failed intraday rallies, closing under support. This action is still distributive, and is creating more pent-up selling pressure than it satisfies. The burden of proof is on buyers, because sellers otherwise continue to get a benefit of the doubt. [/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’s round trip from 1084.00 to 1099.50 and back again left the market where it had gapped open Thursday. Sunday night’s Globex open rallied into midnight at 1096.00, then back down again. Markets were volatile into the week’s end. They were volatile into Friday’s close. And they were volatile coming out of it. But little has changed.

Pattern points (And technical influences)
Little has changed because probes of prior highs never gained traction. Thursday’s gap up ranged sideways until too late to reflect strong sponsorship. Friday’s open left no unfinished business above. Lower lows never gained traction either, but did leave plenty of unfinished business below.

Last Tuesday’s 1036.75 “new Globex trend extreme” and 1046.00 gap open, and the gaps back down to Wednesday’s cash and futures session closes at 1066.25 and 1061.00. These anchors already held back rally efforts into the weekend.

Gapping up Tuesday above 1093.00 may be the only way to break free from their magnetic attraction. There’s still resistance at 1102.00, and it might still hold if the open doesn’t gap above it. The initial objective would be 1110.00-1113.00, and probably higher since there’s no requirement to rally at all.

Otherwise, dips have room down to the 1070.00 area before signaling a retest of last week’s lows. It wouldn’t be unusual in this pattern for new lows to be probed within two days, if not Tuesday. And there’s no requirement for the low’s to hold as support.

Bottom line (My underlying premise)
Holding prior highs is not a sell signal. But failing to exploit a probe of resistance is bearish when timing and illiquidity should have forced a squeeze higher. A gap up that isn’t immediately rejected Tuesday would get every benefit of the doubt for finally launching a corrective bounce. Until then, almost any weakness should be monitored for sellers gaining traction.

PROGRAMMING NOTE: As suspected, there was no customer support during the holiday to resolve the chartroom issue. So we’re probably stuck with the older version Tuesday morning – and it isn’t compatible with Windows 7 or Apple Mac. I apologize for the inconvenience.[/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 open narrowly missed confirming a session-long rally because of a post-open dip. The rest of the day sure performed like one. The last hour’s session highs ticked higher into the close. The morning’s 1094.00 target held multiple intraday resistance tests, and wasn’t exceeded in time to confirm a breakout. Again, that didn’t stop the last 15 minutes from performing like one.

Pattern points (And technical influences)
The potential above the week’s highs was a test of May 19’s “higher prior lows” beginning at 1103.00. That was Thursday’s last-minute high, coming late enough to avoid being rejected. Reversing down from a higher high at 1107.00 Friday would leave no unfinished business above.

Being a Friday, it is difficult to reverse early trending. Early higher highs would have more potential to test May 19’s 1109.75 and 1113.00 futures and cash session closes (respectively). That said, neither one requires a retest. But their test(s) would require a rejection by closing back under a prior low. Otherwise, a much more substantial corrective rally would be underway.

Thursday’s late surge came too late to be a valid breakout. But not for lack of trying. The 3:10-3:20 window’s rejection of probing prior highs narrowly avoided gaining traction on a reversal. Gapping down Friday under 1093.00 would end the rally effort. Extending down under 1087.50 would reverse the recovery from Tuesday and Wednesday, and reinstate their retests.

Bottom line (My underlying premise)
Speaking of which, gaps outstanding at Tuesday’s open and at Wednesday’s close require being filled. Oversold RSIs at their lows also indicate that the current rally – regardless of its size – is sponsored by weak hands. Trending down meaningfully at Friday’s open is already unlikely. But trending down at Friday’s open could find that Thursday’s higher highs came too late to gain traction, and the three-day weekend’s impending illiquidity is making up for lost time. [/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 3:10-3:20 window fell to a new relative low for its period, confirming the session’s lower-end was giving way. The break was triggered under 1074.75, which sliced through its 1068.00-1069.00 target to 1064.25.

RSIs diverged positively on its retest to produce an 8-1/2 point bounce up to 1072.75. Falling back under 1067.50 starting signaling the likelihood for ticking down into the futures close. Extending under 1065.25 started arguing for holding short through the close. Futures ended at 1060.00, and early Globex trading is testing 1055.50.

Pattern points (And technical influences)
All available buying pressure had been expended during Tuesday afternoon’s rally. Its close failed to gain traction. The evening’s higher high and Wednesday’s intraday probe above Monday’s high all came during windows incapable of gaining traction. Now all of that rally above has been retraced.

A retest is required of Tuesday’s 1046.00 gap open, and of the 1036.75 “new Globex trend extreme” that preceded it. There is no particular timing or reaction to retest either. But Thursday’s morning could get there, and extend down sharply at a steepening pace.

1055.50 is Tuesday morning’s high, and it was just touched as support. Its RSIs are oversold. Any bounce there is only obligatory, and temporary. The next lower target is 1027.00-1029.00, and below there is 1007.00-1010.00. Unless Thursday’s open immediately recovers back above 1070.00, or bounces sharply again from new lows, this could get real ugly, real fast.

Bottom line (My underlying premise)
Tuesday’s recovery was too steep so long before the three-day weekend, and its buyers had failed to gain traction. Now the same illiquidity that scared away the drop’s sponsorship could scare away its saviors. The impending holiday will undermine sponsorship for trending in either direction, but wholesale selling doesn’t require sponsorship to trend.[/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 afternoon’s rally started from within 1 tick of the afternoon’s 1048.75 bias-down signal. Its sudden appearance, steep slope and substantial gains characterized it as a short-squeeze. The surge hesitated upon filling the gap back to Monday’s close, and didn’t actually probe its range up to 1074.75 until Tuesday’s futures close.

Pattern points (And technical influences)
Although the recovery was breathtaking in its degree, it was sponsored by weak hands. That’s who buys oversold RSIs like those at Tuesday’s 1036.75 pre-open low. Oversold RSIs  attract bottom fishers, knife catchers, dead cat bouncers. Waiting until Tuesday’s final minutes to finally probe Monday’s low means its buyers didn’t gain any traction for their effort. Weak hands.

Look out below if Wednesday’s open isn’t gaining traction above Monday’s high. Tuesday’s opening 1046.00 gap down was beyond the prior range, so it requires a retest. So does the 1036.75 overnight low, which is a “new Globex trend extreme.” With three more days remaining until the three-day weekend’s illiquidity, Tuesday’s rally came a little early.

Extending the recovery overnight could delay the decline’s resumption until after the holiday.  Since Tuesday’s close attacked the lower-end of Monday’s 1077.00-1088.75 range, gapping up above its upper-end Wednesday would likely marginalize sellers through the weekend. It helps if Wednesday’s open is dipping down to 1088.75 from higher highs overnight.

Bottom line (My underlying premise)
It’s too soon to pronounce Tuesday’s recovery as being done. Early Globex trading Tuesday night added almost 11 points to attack 1085.00. Success would next target 1106.00-1110.00. Failure would extend the current downleg targeting 1007.00-1010.00, potentially this 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.