Market Wrap

[pay]At the close (How the prior session ended)
Better late than never? The impending weekend can influence Friday afternoon price action, and this weekend did so, too. Whether extending or retracing the morning’s recovery, the attempt would be sudden and steep. And substantial, too, if the attempt were underway coming out of the noon hour.

The Employment Situation report’s negative reaction had been recovered, in-line with expectations. The trending attempt waited until Friday’s last half-hour, leaving little time to be substantial. But it was sudden and steep. Perhaps the 4-point surge can be considered substantial, relative to the post-open, 3-point, uptrending channel.

Regardless, the late action was a short-squeeze, which is fueled by weak-handed shorts covering. The sellers may have distributed over the course of several days, but didn’t have the wherewithal to outlast the weekend.

Pattern points (And technical influences)
New extremes on Friday are very very rarely a trend extreme. Some higher high is likely, even if there is first a pullback. And a pullback is possible, especially when the new trend extreme is the product of a last-minute breakout.

The alternative is not to resume ranging sideways – if a gap up doesn’t reverse down immediately, then it is likely to extend higher through the morning. Monday’s breakout was barely confirmed, and slow to extend. But it is now trying to extend. The delay may be foreshadowing a poor reception at the next target.

Bottom line (My underlying premise)
Recovering 1143.25 would help to confirm the next target is 1157.00-1159.00. Failing a probe or a gap above it would put the rally on hold for a pullback, if only through Monday morning, so long as no prior low is broken.

PROGRAMMING NOTE: The chartroom is now linked here. It is compatible with Windows 7 and Apple Mac operating systems. We can switch back to the previous platform at a moment’s notice. Let me know ASAP of any difficulties or irregularities you perceive.[/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’s last hour started with a 4-point plunge from the 1138.50 high down to 1134.50. Overbought 1-minute RSI quickly became oversold, while 3-minute RSI had barely returned to its mid-range. A bounce was likely since the drop was not likely to extend.

The bounce could have been a shallow, and instead the highs were retraced. The Employment Situation report could have been vulnerable to bouncing, but that situation was neutralized. RSI diverged negatively at the high’s retest, forming a weak base to launch any higher high.

Neutralizing the oversold situation makes a negative reaction somewhat more possible – I don’t like to label a knee-jerk reaction to news as “likely” or not. But by ending the day above 1132.50, negative reaction to the news should be absorbed and recovered.

Pattern points (And technical influences)
After recovering the open’s odd bobble, Thursday afternoon’s higher close was in-line with Monday’s confirmed breakout. The delayed follow-through suggests that its upleg is likely to be reversed back below Monday’s range by as much as it is exceeded.

That upleg is targeting 1157.00-1158.00. There was no requirement to trade through Wednesday morning’s 1134.50 high. Closing above it has pushed Monday’s breakout forward. It can be negated Friday (or at least jeopardized) by closing under Thursday’s 1127.50 low.

There is already an attraction back down to Thursday’s 1127.00 pre-open low whose RSI was oversold. Its retest need not occur in any particular order. But a test of 1127.00 would find little support at any time other than pre-open.

Bottom line (My underlying premise)
Overnight volatility tends to be subdued ahead of the Employment Situation report. Probing higher highs before the news wouldn’t make any particular reaction likelier. The focus is on the reaction’s resolution, which should be interesting through the morning.

PROGRAMMING NOTE: The upgraded version of our current chartroom software has improved its recording facility. The stopped viewing and sound quality issue has been resolved. I will roll out the new room Friday afternoon to run concurrently with the current version. The switch will be “more” permanent on Monday.[/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 close wasn’t doing much of anything. Certainly nothing that had not been done already intraday, a lot.

Tuesday’s 1132.50 high was being tested at the close. It had been tested or overlapped 6-7 times already, through every timing window. Buyers gained no traction on the day. But neither did sellers, and they bear the burden of proof.

Wednesday’s 1135.50 high had printed several minutes before the session’s last hour. New session highs during the session’s last hour would have easily extended higher. Extending higher would have expended buying pressure. Sellers didn’t exploit the hesitation, so mild weakness at Thursday’s open – similar to Wednesday’s opening expectations – would likely recover to fresh highs.

Pattern points (And technical influences)
Clearly, new highs aren’t attracting new buyers. And they’re not attracting sellers. Thursday’s open is vulnerable to gapping up or surging. And as with Wednesday, mild weakness at Thursday’s open would likely recover to new highs.

Sellers can’t retake control at this stage without gapping under prior lows. A gap under Wednesday’s 1130.00 lows would at least attack Tuesday’s lows down to 1126.25. Any lower would essentially seal a top. The actual path lower would find obligatory support at 1117.00-1119.00, and then upon filling the gap back to 2009’s close.

Bottom line (My underlying premise)
Wednesday was the first session since Monday and Tuesday’s breakout and confirmation. I noted here in yesterday’s Trading Plan that the breakout seemed suspicious. Wednesday’s lack of follow-through may have discounted this sufficiently to allow follow-through Thursday. And if Thursday does resume the breakout, then it should be steep, if not also substantial, but not necessarily long-lasting.

I would consider selling only after an early surge appeared to be waning, or on a sufficient gap down. Extending the breakout through Thursday’s close would put into play the 1157.00-1158.00 area. Otherwise, turning down immediately would leave no unfinished business above.[/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.

New year, new format… I have incorporated various subscriber feedback to reorganize the daily outlook. My thanks to all for your input, which I always enjoy reading.

[pay]At the close (How the prior session ended)
Tuesday’s last 90 minutes-plus rallied 7 points to test the morning’s 1132.25 high. The decline off the morning’s high had targeted 1126.00. This target was satisfied just before 2:30. Waiting any longer would have extended the selling pressure into the next timing window. Instead, the afternoon’s no-bias environment was still in force, helping the range’s lower-end to hold its test as support.

Pattern points (And technical influences)
Buyers expended a lot of energy just to travel from one end of the range to the other. Buyers gained no new traction. And the range is still centered around last week’s 1128.50 high. RSIs diverged negatively after the cash session close, which is a little late to be reliable, but it isn’t bullish.

Tuesday’s session did close above Monday’s high, and Monday’s high was the first new high close in a week. With the basic requirements met for a breakout and confirmation, I would still consider selling only special situations (like Tuesday morning’s high).

A gap down under Tuesday afternoon’s 1126.00-1127.00 high would trigger a session-long decline. Any less initial selling pressure would be likely to recover for a retest of Tuesday’s highs, perhaps even to trend up into noon.

Bottom line (My underlying premise)
Tuesday’s last upleg triggered its buy signal too late to be confident in it. And it already satisfied its buying pressure. If Wednesday’s open isn’t rejecting or retracing Tuesday’s last upleg, then Tuesday’s last upleg is probably extending higher through the morning.[/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.

New year, new format… I have incorporated various subscriber feedback to reorganize the daily outlook. My thanks to all for your input, which I always enjoy reading.

[pay]At the close (How the prior session ended)
Equally relevant to how the prior session ended is when. And where. The morning’s surge lost all momentum into noon, upon retesting last week’s 1128.50 Globex high. From there the afternoon only ranged narrowly within 2 points.

The highest upside objective had been neutralized, RSIs diverged negatively, and the morning’s bias-up had lapsed. None of which is a sell signal. A vulnerable rally is still a rally.

“Objects in motion tend to stay in motion, until acted upon by an equal and opposing force.”The afternoon’s narrow range was not opposition. A credible sell signal must break under Monday’s 1125.25 opening high. Any less of an effort would be likely to recover.

Pattern points (And technical influences)
Monday’s new high close looks like a breakout because it is above all prior intraday highs. A second consecutive higher close is required for confirmation, Even more so, since Monday’s close was still in the process of testing last week’s 1128.50 Globex high.

And since Monday’s close was still in the process of testing last week’s 1128.50 Globex high, gapping down at Tuesday’s open would leave no unfinished business above to prevent a decline. A sufficient gap down, like under Monday’s 1125.25 opening high.

The breakout attempt did avoid triggering a “Gotcha!” setup – probing prior intraday highs and yet closing back under the high close. This is another vulnerability that sellers failed to exploit – so far. Sellers can have a little more time to trigger the setup by immediately breaking back under 1123.00. But the rally will likely extend higher if sellers haven’t gained traction before Tuesday morning’s timing window lapses.

Bottom line (My underlying premise)
Narrowly ranging afternoons don’t often start trending from a standing stop. So, an early trending attempt would be suspicious, whether trying to extend Monday’s rally or retrace it. The burden of proof is on any trending attempt. Its sponsorship must offer evidence of like improving technicals, or breakouts maintained through relevant timing windows. Until then, the ranging may expand, but it will otherwise likely persist through the morning. [/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.