Market Wrap

[pay]About that close (How the prior session ended)
The open’s rally from 1174.50 to 1183.75 peaked before 11:00am. The balance of the session ranged narrowly, holding the morning’s 1181.25 bias-up signal as support. Monday’s last hour looked much like the afternoon as a whole. Both 1-minute and 3-minute RSIs avoided overbought and oversold territory, so there wasn’t even any sponsorship for trending

Pattern points (And technical influences)
The morning’s original test of 1181.25 was underwhelming. Despite surging nearly 7 points, the 15-minute grace period was barely invoked. Higher highs waited until well after signaling a no-bias environment. And then, of course, there’s the narrow five-hour trading range.

It all sounds so complacent, but it was really optimism. The same optimism slowed the overnight rate of descent and kept it shallow. The same optimism saved the open’s spike down from dipping just 3 more ticks to fill the gap back to Thursday’s close. And it avoided pullbacks from Monday’s new high, keeping the ranging narrow.

Nevertheless, the optimism did hold new highs suggesting that sellers are waiting for higher highs. That potential is still 1185.50, 1187.25 or 1193.25. Retesting Monday’s oversold RSIs at 1174.50 first would suggest the rally had already peaked, but dips should otherwise recover from testing 1179.00.

Bottom line (My underlying premise)
The complex triangle pattern depicted in yesterday’s Trading Plan is still operative. New highs should not justify complacency. The pattern opens a window to reacting down, and a reaction down at this stage of the pattern could be impressive.[/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)
After a momentary knee-jerk blip down to 1170.25, the Employment Situation report’s reaction surged to 1176.00, and then extended to 1178.75. Its sponsorship was enhanced by the residual buying that had retraced Thursday’s no-bias trending. Having recovered that drop so quickly, follow-through to higher highs became likely, and that has been fulfilled.

Pattern points (And technical influences)
Friday’s follow-through fulfilled the required behavior, which was to probe higher highs. This doesn’t necessarily mean the higher highs fulfilled buying pressure. Fulfilling the optimistic behavior makes the market vulnerable to a dip. Dipping while there is outstanding buying pressure makes that dip a buying opportunity.

That is, so long as the dip is within reason. A pullback to 1172.00-1173.00 would be optimal. Under 1170.25 would be dangerous, setting up a test of 1165.00. And a break under 1163.00 would trigger a Double Top targeting 1144.50.

Otherwise, whether recovering from a dip or simply extending higher, buying pressure would be fulfilled by new highs at 1181.00 or 1183.50. Any higher through a relevant timing window would put into play 1191.75 and potentially 1193.25. For as many longer-term predictions called for 1200.00, either price will push down aggressively before these next higher targets are met, or else meeting them would all but ensure blowing through 1200.00.

Meanwhile, note how the proposed Double Top’s interim consolidation is sloping upward. This pattern’s reversal typically takes an aggressive posture, so don’t be lulled into complacency at new highs.

Bottom line (My underlying premise)
Conditions were weird for absorbing Friday’s Employment Situation report. The next week’s open will still be reacting to the news, but also to the reaction to the news. And I don’t think the action will be subdued. Note in the above charts that price as recently as Wednesday Mar 31 was still overlapping price action from two weeks earlier on Mar 17. This is not typically where a chart stands still. [/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 recovered the afternoon’s drop. It had originated during a no-bias environment, which required its retracement. The 8-point drop to 1166.25 nearly filled the open’s gap, falling more than 11 points under Thursday’s high. But no-bias means no-bias, and the retracement’s 1173.75 target was met at the close.

Pattern points (And technical influences)
No-bias trending is retraced because its timing reflects the weakness of its sponsorship. The timing of its retracement is reflective of the newer sponsorship attracted to counteract the no-bias trending.

So, an immediate retracement in the very next timing window reflects the newer sponsorship’s relative strength. It also means that the newer sponsorship is relatively newly formed. Being newly formed makes it less committed. A later retracement would have reflected much stronger sponsorship, benefiting from the extra time to form.

Thursday’s buyers were just stronger than sellers, as implied by quickly recovering the afternoon’s earlier dip. The recovery is likely to extend initially. Extending the recovery is then likely to find plenty of willing sellers.

Caveat: Likelihoods are a function of variables in a constant environment. Friday’s “session” is anything but, due to two oddities. Firstly, regularly scheduled economic reports are normally rescheduled when they happen to fall on a holiday. The Employment Situation report has been historically no exception. Secondly, the Globex session that normally trades to 11:30 ET, but this Friday will close at 9:30.

Bottom line (My underlying premise)
We’ll be in the chartroom (there’s no bias parameters or other updates). It will be quick, possibly weird, and certainly interesting. Rather than a daily Morning Market Tour before the open, we’ll record the normal daily market wrap after futures close. [/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)
A three-hour narrow trading range finally ended when the afternoon’s no-bias environment started lapsing after 2:30. The gap back to Tuesday’s 1169.50 close had held multiple tests as resistance while refueling sellers. A test of 1165.00 was still likely before the close, and it was probed down to 1162.75. RSIs diverged positively, producing a bounce into the close reached 1168.00.

Pattern points (And technical influences)
It’s too late to signal that sellers have regained control. But Wednesday afternoon’s renewed sell-off gives them a benefit of the doubt again. Bounces to resistance have the burden of proof for extending higher. Tests of support are likely to break lower, if only for brief dips to the next support.

Sellers had came very close to being marginalized through Friday. Perhaps they were. Wednesday morning’s sell-off that started overnight couldn’t have waited any later to begin. Its  drop had mixed results, the most bearish of which was to give sellers more time. Even that extra time needed extra time, missing both ends of the noon hour.

The bounce into Wednesday’s close retraced too little of the last hour’s drop to invalidate it. The 1168.00 lower-end of the mid-day consolidation held as resistance. A gap up above the range’s 1170.50 upper-end would marginalize sellers. Otherwise, price should range back down to the 1163.00 area.

Bottom line (My underlying premise)
It might not be done Thursday, but another decline could still be attempted. Last Thursday’s sell signals were confirmed by Friday’s lower lows. That confirmation also fulfilled the least selling pressure, that might have also ended the signals being confirmed. Monday and Tuesday’s action (lack thereof, actually) ruled out whether sellers were satisfied. And this last point was confirmed by Wednesday’s morning and afternoon drops.

More jobs metrics are due Thursday, offering the last chance to tweak expectations ahead of the Employment Situation report due on Friday. Their impact should continue to be bigger than usual since there’s no cash session Friday, and futures close 45 minutes after the news.[/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 ranged narrowly at afternoon highs, attacking Monday’s highs, and ultimately failed to improve. RSIs diverging positively at the 1166.00 afternoon low had created potential to 1170.50, which held two tests as resistance. Trending through 3:10-3:20 would have extended into the close – either above 1171.00 or under 1168.50. Instead Tuesday’s last 90 minutes bounced from one end of this range to the other. The opportunity was there, but it was not exploited.

Pattern points (And technical influences)
Having touched both ends of the 1168.50-1171.00 range makes the next trending attempt likelier to extend, even if only 3-4 points before hesitating. This measurement presents two interesting scenarios.

The first scenario is a 3-4 point drop targeting Tuesday afternoon’s 1166.00 low. Its immediate break at Wednesday’s open could trigger a session-long decline – it’s not an ideal setup since the last-minute action didn’t bounce. Regardless, having missed the Tuesday deadline for retaking control, this scenario would serve by proxy for sellers to retake control before they’re marginalized ahead of the three-day weekend.

A second scenario would gain 3-4 points to retest Tuesday morning’s overbought RSIs at 1173.75. The overbought readings developed during a reaction to news, so its retest isn’t required. But potential for its retest remains alive so long as price remains within its orbit. And Tuesday’s close was as far as possible from 1173.75 without decisively leaving its orbit.

Bottom line (My underlying premise)
Monday’s gap up, probe of prior highs and entirely positive session never extended, which was ineffectual optimism. It still recovered Friday morning’s post-open low. But Tuesday’s session already exploited this bullish element when sellers failed to gain traction. Despite the extra day – and despite Friday’s low having fulfilled near-term selling pressure – buyers haven’t gained traction since Monday’s open.

Rally attempts into the weekend are possible, but aren’t likely to evolve into a new upleg. Even if marginalized, sellers could still trigger trending efforts, but not necessarily, and their efforts would likely recover. In either case, there’s still one small window open for sellers to regain traction, and it would have to be obvious overnight.[/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.