S&P
Post-market Wrap (recording & summary)
Friday’s session finally provided a capitulative leg, the last half-hour’s 17-point slide into the close. It was only slightly larger than the 15-point break out of the noon hour, and only slightly steeper. But any hesitation was narrow and momentary.
While capitulation is known for accompanying bottoms, that’s not usually the case on Fridays. And anyway, capitulations can form a bottom’s entry, but the bottom must still have time to form. That may be moot, since the pattern on a Friday is likelier to be duplicated on Monday — gapping down and trending down sharply.
Gapping up is possible, but not enough to reverse the trend up. Extending down could find a near-term low, or else put Friday’s decline to shame. We’ll discuss the signs for each, and their potential, at the weekend’s Saturday Review.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Pre-close View… Capitulation?
Probing fresh lows, but only steadily.
Trending down from the noon hour’s consolidation above 2140.00 slid to 2127.00 during the bias environment. The slope was steep, but not capitulative. And that was the decision made by not bouncing out of the noon hour.
The position-squaring window broke lower, but only to 2124.25 where 1-minute RSI is diverging positively. A hold-short is compelling — as compelling as possible for a weekend — so long as 2133.00 isn’t being recovered within 3 minutes of the cash session close at 3:57 ET.
REMINDER: We DO have a Saturday Review this weekend. Details will be sent overnight.
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Sep Contract (EC, ETF: (FXE, UUP))
Thursday’s key reversal from probing above 1.1300 was immediately productive, trending down overnight to gap down Friday, and to extend down lower intraday. Closing under 1.1225 confirms momentum has reversed down.
Gold Dec Contract (GC, ETF: (GLD))
Friday’s open was still struggling to let go of the 1343.00 sell signal that was being overlapped at Thursday’s close. Selling pressure was relentless and eventually succeeded to drop more decisively intraday, testing 1334.50 whose break would confirm momentum has reversed down.
Silver Dec Contract (SI, ETF: (SLV))
Thursday’s break under the 19.75 sell signal had extended down overnight, which persisted through Friday morning to test 19.35, whose break would help to confirm that momentum has reversed down.
30-year Treasury Dec Contract (US, ETF: (TLT))
The very productive sell signal that triggered Thursday under 170-00 was extended down sharply overnight after holding a test of the 168-22 bounce limit. Gapping down and trending lower tested 167-28. The second consecutive lower close confirms a breakout that now requires at least an eventual third lower close — potentially to 165-20 / 165-30 — before a recovery would be credible.
Crude Oil Oct Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Thursday’s test of 47.55 resistance reacted down sharply overnight, and Friday’s gap down to its 46.80 pullback limit extended lower throughout the morning to attack the 45.80 sell signal. Its break is likely so long as bounces now hold tests of 46.55.
Natural Gas Oct Contract (NG, ETF: (UNG, UNL))
Already probing only slightly higher overnight, Friday’s session didn’t so much close higher as much as maintain the firming up to 2.82. Not an optimal second consecutive higher close, so not optimal confirmation of Thursday’s breakout from the four-day sequence preceding it.
Mid-day Update… Air pocket, indeed.
Not getting better.
The noon hour low was so oversold that it would either bounce to refuel, or else capitulate. The market seems to have chosen the latter path. Making it more bearish is that the market didn’t have to choose the more pessimistic path. This morning’s bias-down signal had remained influential throughout the noon hour as did Wednesday morning’s bearish Pivot Reversal. The air pocket down to the 2140.00 area was fulfilled.
Consolidating narrowly at or above 2140.00 for an hour broke lower into the bias environment. Although probed lower, the 2137.50 bias-down target was touched by the 1:20 bar to avoid renewing the bias-down signal. That doesn’t change whether this is a bias-down environment — it is, and fresh lows are now attacking 2131.00, which is 41 points under yesterday’s cash session close.
I’ve been commenting in the chaRTroom about this being a very bearish pattern. Today’s price action has been a continual series of lower lows and lower highs. The gap down back to last Thursday’s close has extended below the multi-day consolidation that had developed into last Thursday. And just look at the damage being done to the bigger picture.
Today will not form a bottom, and Monday will be unusually vulnerable to repeating today’s pattern of gapping down and extending sharply lower throughout. Having said that, entering the noon final hour back above the bias environment’s 2138.00 high could get squeezed up to 2150.50.
Look ahead: Economic Calendar – for Mon Sep 12, 2016
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Monday’s pre-open Fed speaker is too early to reliably impact intraday action. But Fed speak is even higher-profile now than normal, and being Monday’s first even can set the tone for the day. One of the afternoon’s Fed speaker is rarely surprising, but that’s secondary as rate hike anticipation grows, and with another Fed speaker timed then, too.
*Dennis Lockhart Speaks
8:00 AM ET
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
*Neel Kashkari Speaks
1:00 PM ET
*Lael Brainard Speaks
1:00 PM ET
3-Yr Note Auction
1:00 PM ET
10-Yr Note Auction
1:00 PM ET