Market Wrap

[pay]About that close (How the prior session ended)
Extending above 1192.00 Monday suggested that the mid-morning dip had refueled buyers. Their 1200.25 target was met during the noon hour, and it held repeated tests as resistance through the session’s two remaining timing windows. A last hour dive from 1202.00 to 1197.00 only ranged sideways through the session’s last half-hour.

Pattern points (And technical influences)
1200.25 was the afternoon’s highest calculable target. Holding its test through the noon hour robbed buyers of their traction. Optimism prevented a dip during the afternoon’s two timing windows which could have created higher target.

The last hour’s eventual dip stopped at least 2 ticks short of its 1196.00-1196.50 target. So again, instead of refueling buyers like the mid-morning dip, optimism kept the afternoon’s drop too shallow.

Other intraday optimism left unfinished business below at 1195.00, 1191.00, and 1183.00. They’re essentially in-play if 1196.00-1196.50 gives way (its upper-end was touched at the Globex open). An attempt to resume the rally would be signaled above 1200.50, next targeting 1204.00.

Bottom line (My underlying premise)
A tenuous base extended Monday’s rally through the noon hour. While the excessive optimism that fueled it is one reason to expect its eventual failure, that same factor may help to fuel it further. Until momentum signals its reversal down, any dip would be vulnerable to recovering prematurely.[/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)
Trending out of a Friday’s afternoon’s bias environment is difficult to stop. It’s either going to extend, or else reverse sharply. Friday’s extended.

The afternoon’s bias-down target was met and held before the bias environment even began, expending all available selling pressure. Never fear – a bounce through 2:30 refueled sellers. The bounce also thoroughly tested relevant resistance – 1193.50. Ninety minutes later Friday’s last-minute low touched 1182.75.

Pattern points (And technical influences)
Friday’s 1182.75 last-minute low was 25 points under the 1208.00 post-open high. A lot of energy was expended. Did sellers gain traction for their efforts? Yes. Friday’s low did probe Wednesday’s last-minute low at 1184.25 (circled red), but the reaction failed to recover that probed low’s prior high (boxed green). Now the next relative low at 1176.75 is an objective (dashed red line).

The path there may not be direct. RSIs diverged positively into Friday’s last-minute consolidation. That’s too late to qualify as a buy signal and it could still resolve down without delay. It’s still likely to resolve down, but not necessarily immediately.

Thursday’s equilibrium setup is dead, probably killed by Friday morning’s bias-down that persisted through the noon hour. Regardless, the setup’s potential influence is limited to the following day, and that day has ended.

No doubt the fluid news environment motivated much of Friday’s selling. Surviving the weekend might be worthy of a bounce. A recovery or an attempt isn’t impossible, but it would be unrelated to Thursday’s equilibrium setup. Just recovering 1198.50 intraday or 1193.50 on a closing basis (both green lines in the top chart) would start giving buyers traction for another bounce leg.

RSIs did diverge positively into Friday’s last-minute low. But ts effect could play out Sunday night in a corrective bounce to 1191.50-1193.50 without leaving unfinished business above. Monday’s open could already be well on its way to probing last week’s Globex 1176.75 lows (dashed red line on top chart), on the way down 1175.50 and 1171.00.

In practice, I suspect this group of targets will be probed intraday down to 1164.00-1165.00. Then its test would either launch a bounce to refuel sellers for a bigger downleg, or else plunge through 1156.50 to extend the current one. In other words, a new relative low would damage the chart beyond repair. Almost any delay to resuming the rally would be due to the trend already reversing down.

Bottom line (My underlying premise)
The two-week old topping pattern (circled red in second chart) remains much more vulnerable to launching a downleg soon. Perhaps the cause is PIIGS and other sovereign debt issues, FINREG’s attack on hedging that undermines liquidity, or the Gulf coast’s environmental game changer. Check “D” for all of the above. For extra credit, throw in the summer timing – the market is approaching an historically difficult seasonal period. It doesn’t take much, just more sellers than buyers. [/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)
Careful what you ask for. The open had gapped up, the morning had extended higher, and the noon hour climbed more. When Thursday afternoon’s no-bias environment finally ended, trending was free to resume. But probing fresh highs by only 2 ticks found buyers already stretched too thinly.

At least the drop from 1206.25 to 1201.50 didn’t gain any traction. Lackluster RSIs had already shown that noncommittal buyers and sellers were the biggest impediment to trending. The last half-hour’s bounce closed back at the 1204.00 morning highs.

Pattern points (And technical influences)
1204.00 was also a major corrective bounce target. Closing there means the market is in a state of “equilibrium.” Buying pressure has been satisfied, but no new pattern has been triggered.

Equilibrium mornings can seem to be rudderless, but not like the usual no-bias environment. Trending is almost certain to be attempted – two or three times, often in alternating directions, and at least one time to a significant degree. But the market is anchored, and at least twice the trending is retraced back to its origin.

Gapping Friday beyond either prior high or low (1206.00 and 1200.00, respectively) can break negate the equilibrium setup. This would be confirmed by extending through the open, which isn’t assured as the equilibrium influence would fight for a retracement.

Bottom line (My underlying premise)
Thursday’s close had an opportunity to signal trending overnight, by closing outside of the 1202.00-1205.00 range. It didn’t, despite repeated attacks on either end. Gapping up Friday above 1206.00 to negate equilibrium only requires 2 points. If that were so simple, then Thursday’s close probably would have accomplished it.

Each of the two factors suggests that the rally from Wednesday’s low has been a corrective bounce. This being a Friday, early trending would likely gain traction – which suggests that trending won’t be signaled early unless it is a bias-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.

[pay]About that close (How the prior session ended)
The post-FOMC environment chopped around everywhere, but never got anywhere. From a narrow 1186.00-1188.00 two-hour range preceding the news, the hour following the news bounced between 1192.00 and 1184.25.

The last hour dropped to 1184.25 during the position-squaring window, trapping shorts. When the window ended, a short-squeeze bounced back up to 1191.00. Futures closed at the morning’s 1190.00 bias-up target, above the cash session’s 1188.50 closing equivalent.

Pattern points (And technical influences)
Although overnight lows probed Tuesday’s low, the bottom stopped optimistically short of touching 1175.50. The cash session’s mid-morning plunge optimistically stopped short of probing Tuesday’s low. The afternoon’s rally attempts were understandably stymied.

The bounce might try to extend Thursday. But Wednesday’s base isn’t capable of launching a sustainable rally. Higher highs would target 1198.50 and potentially 1204.00 – possibly 1206.00 and even 1211.50 given a decent tailwind.

While there may be no active unfinished business below, sell-offs have been saved by excessive optimism. No further bounce is required. Almost any delay in rallying Thursday would suggest the lows will be probed before the weekend. And no template resolves up at this stage of the pattern if new lows are probed this near the weekend.

Bottom line (My underlying premise)
In a fluid news environment, no apparent trending can be relied upon to extend. It’s almost worth planning that trending will reverse, not just that it might. The first trending attempt. Its reaction would be much more credible, whichever the order. [/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)
Tuesday’s last hour began by rejecting the third and final consecutive push lower to 1185.75. Like the prior two, price quickly bounced back above its prior low. The entire 3:10-3:20 timing window didn’t trend up, but it did reach 1190.75.

The bounce could have extended. But five minutes later, 1190.75 was still being tested. This wasn’t necessarily bearish, except that this particular moment needed to be obviously bullish. It was not, so a 30-minute, 13-point dive down fell to 1177.50.

Pattern points (And technical influences)
Simultaneously oversold 1-minute and 3-minute RSIs at the late low launched a 5-point bounce. Futures ended at 1181.00, keeping alive potential to Tuesday afternoon’s 1175.50 bias-down target.

1175.50 is the upper-end of the Complex Triangle that ended March. The pattern can be probed down to 1170.00 and still be capable of recovering for a corrective bounce. Any lower would be likely to extend down to the pattern’s minimum objective at 1156.50.

As for that corrective bounce, it should be remembered that Tuesday’s plunge originated during a no-bias environment. No-bias trending is always likelier to be retraced than not. This one is less likely, since Tuesday morning’s bias environment was exited under its 1198.50 bias-down target. But its potential can’t yet be counted out.

Recovering an early dip Wednesday to 1175.50, or opening above 1193.50, would interject a bounce. Anticipation ahead of FOMC news coming in the afternoon will be an interesting influence.

Bottom line (My underlying premise)
New sponsorship might arrive and extend the decline. If so, the decline will extend in a very big way. Sellers might refuel first, but it’s not necessary. Thursday’s 1186.25 low required a retest because oversold RSIs attract weak buyers. Printing new highs in the interim means the weak buyers have attracted some pretty heavy sellers.

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.