Market Wrap

[pay]About that close (How the prior session ended)
The new month got off to a fast start. The morning was pretty quick to stop it. The morning’s 1113.25 bias-up target held its test through 10:15 to rob buyers of their traction. That didn’t prevent buyers from regaining traction at the next timing window. And yet, they didn’t.

Pattern points (And technical influences)
Despite dipping to 1108.75, the balance of the session barely pierced 1114.50. And despite a series of higher lows, 1113.25 was in there, somewhere, throughout. The template of a narrowly ranging Monday afternoon tends to precede a narrowly ranging Tuesday morning. Early attempts to trend away from the range are likely to return back into it.

Monday’s repeated probes of resistance all failed to extend higher. The optimism isn’t ineffectual, because it probed fresh highs and closed above prior highs. Its effort isn’t likely to end without first probing higher highs. And a probe of higher highs is vulnerable to gaining traction for attacking January’s highs.

Bottom line (My underlying premise)
An immediate dip would likely present a buying opportunity. Gapping down under Monday afternoon’s 1111.00 low would gain traction for a bigger dip first. Gapping down under Friday’s 1106.00 highs would turn Monday’s buying into distribution, taking fresh highs off the table, and probably trigger a new 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]At the close (How the prior session ended)
Friday’s pre-open dip was deep enough to launch a bounce back up to the 1107.75 overnight high. But it didn’t. A test of the 1097.00 bias-down signal was deep enough for the 1107.75 bias-up signal to be met. But it wasn’t.

Not for lack of trying. The morning’s 30-minute 10-point peaked at 1106.00. The afternoon’s two-hour 6-point rally reached 1106.50. But the cash session still closed essentially flat on the day (a pattern established at the open).

Pattern points (And technical influences)
Two setups were formed at Friday’s close. The first is the basis for a session-long decline, triggered if Monday’s open were to gap down under 1101.00. That’s the afternoon’s low (excluding the noon hour), and it is relevant because Friday’s last trending was up.

The other setup is the “Friday Factor,” which doesn’t often form. Both the opening and closing 15 minutes trended in the same direction – down – so Monday’s open is likely to initially trend down, too. The setup doesn’t influence relative value, only direction. So, Monday’s open can gap up and the first several minutes can then trend down.

Friday’s inability flat close proves that Thursday afternoon’s rally didn’t gain traction. The morning’s dip to 1097.00 could have refueled buyers, had a rally followed by the close. Instead the dip chipped away at the only real support standing between Thursday morning’s 1090.00 lower prior highs.

And a retest of 1090.00 remains likely because that’s where Thursday afternoon’s no-bias rally originated. There’s still minor unfinished business above, the 1107.75 overnight high. Its recovery would give the bounce one more chance to extend past last week’s highs.

Bottom line (My underlying premise)
Monday’s econ calendar isn’t as busy as Friday’s gauntlet, but it’s unusually busy for a Monday. Early trending can once again be vulnerable to reversing direction, if not accelerating.   [/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]At the close (How the prior session ended)
Thursday afternoon’s recovery extended into the last hour. The mid-afternoon consolidation up to 1098.00 had potential to extend up to 1101.00. A dip probed 1098.00 support by 1 point, then bounced to probe 1101.00 by 1 point.

The 3:10-3:20 window trended down throughout, so the buying that followed was weak hands. And the last hour’s dip didn’t probe a lower low to refuel buyers. A lot of energy was expended in only getting the market back to unchanged.

Not quite unchanged, actually. The 1-point deficit back to Wednesday’s 1103.50 close might reflect just enough pessimism to keep alive the recovery into Friday’s open. Thursday’s entire last half-hour was close enough to fill the gap at any time, and didn’t.

Pattern points (And technical influences)
Still, the recovery did come close enough to unchanged that buyers failed to gain traction for their efforts. Extending higher at Friday’s open would still be vulnerable to reversing down before the bias signal. Not extending higher would be likely to repeat the reaction to Wednesday’s late levitation act – and slide down sharply.

Thursday’s opening consolidation extended through the noon hour to validate its relevance. It is not a false break, and its retest is required. That retest’s objective begins at the range’s ~1090.00 upper-end or “lower prior highs” and stretches down to the open’s 1087.50 gap.

The afternoon’s recovery originated during a no-bias environment, requiring its complete retracement. And having delayed the retracement through an additional timing window, the objective should be exceeded. A new relative low at 1080.25 would suffice, but 1075.00-1076.00 is more likely.

Thursday’s sellers had a “session-long” decline going for them, but the open bit off too much to digest. Instead of the last hour going out on session lows, it inverted to end at session highs. Nevertheless, the open’s rejection of Wednesday afternoon’s upleg wasn’t rejected, wasting a lot of buying pressure.

Bottom line (My underlying premise)
Friday’s news flow is a different kind of mine field than Thursday’s unusual mix. The first half-hour is treacherous, and initial trending would be vulnerable to reversing. But this being a Friday, the morning’s ultimate bias signal is likely to persist through the noon hour, whether bias-up, down or no-bias.  [/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]At the close (How the prior session ended)
Wednesday’s highs developed into a Double Top. The interim pullback’s consolidation was sloped upward, reflecting optimism. That’s not a healthy pullback. In this pattern, the optimism is sorely missed just when it is needed most – to break through the first high.

The mid-afternoon’s 6-1/2 point dive to 1099.00 was entirely appropriate, both in its timing and in its degree. The reaction’s bounce up to 1102.50 was also appropriate, retracing 61.8% of the Double Top’s interim consolidation.

But rather than resume dropping, the last half-hour bounced a little further, back up to the morning’s 1103.75 bias-up target. And that’s where the session ended, while RSI deteriorated and MACD diverged negatively.

Pattern points (And technical influences)
The pattern’s next leg should have been down, not higher. Its delay has consequences, typically that the next downleg comes with a vengeance. That might include a higher high, first – there’s room up to 1107.75 before buyers start gaining traction. But a break back under 1101.00 would signal the Double Top’s downleg had resumed.

A nearly immediate  recovery above 1110.00 would put Tuesday’s drop behind us. It’s not the likely pattern, but it’s possible since Wednesday’s high probed 1104.00 “higher prior lows.”

Wednesday’s drop stopped optimistically short – if only 1 tick short – of touching its 1093.50 objective. The 1092.50 overnight low stopped short of touching the prior session’s overnight low. If a downleg attacks this area for a third consecutive session, it is likely to slice through prior lows. The potential downside could come off the table quickly Thursday if not attempted early.

Bottom line (My underlying premise)
Wednesday’s post-open surge originated during a no-bias environment. The objective was nearly touched, so the “no-bias” rally might avoid an otherwise required retracement. So, I wouldn’t sell early strength until it had reversed down enough. And I would consider getting long if sellers aren’t in control soon after the open.[/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]At the close (How the prior session ended)
Tuesday’s cash session ended in steep decline. Fresh afternoon highs probed 1097.00, then fell 5 points. That took all of 40 minutes. The next 15 minutes into the futures close retraced the entire drop.

Wednesday’s open could have been greeted by an oversold condition, but the post-close surge erased it. And in its place was left a 4-1/4 point premium to the cash session close that will try to attract price down at Wednesday’s open.

Pattern points (And technical influences)
The entire session was spent in negative territory after the open gapped down, probing new relative lows down to 1090.25. This was productive selling. New session lows did recover  back above the morning’s 1094.00 low, robbing sellers of their traction. But buyers didn’t gain traction in their place.

That would have required a recovery above the 1097.25-1098.00 mid-morning highs. That was attacked twice during Tuesday’s last hour, plenty of time to extend higher – if that were the market’s intent. Now 1097.25-1098.00 can be probed – up to 1101.00 or 1104.00 – but probably only to refuel sellers.

3-minute RSI made lower lows into the session low, undermining the quality of the afternoon’s bounce. It was the only instance of impatient optimism, after the morning’s impatient pessimism caused a shallow bounce to resolve down prematurely. A gap down Wednesday won’t necessarily extend down, not immediately, probably now without maintaining a break under 1088.00.

Bottom line (My underlying premise)
Regardless, the ultimate resolution is still likely to be down. All dips to 1093.00-1095.00 have chipped away at its support. All rallies above it have been distributive. The news flow is getting interesting, and only gets more interesting through the 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.