Perfect storm: payrolls, Grexit, early close

We monitored the Payrolls reaction in the chaRTroom this morning. 

Overnight action had firmed to within 1 tick of 2064.00 resistance, but dipped to 2059.00 before the release. Its knee-jerk reaction spiked down to 2049 and back up to 2055.00. From this I calculated the maximum rubber band stretch to be 2046.00-2047.00, where either it snaps up to reward knife-catchers, or else it simply snaps to punish them.

And it didn”t snap up. A brief defense of 2046.00-2047.00 resolved down to touch 2039.00. Down 20 points under the pre-release low.

New sponsorship wasn”t responsible for pushing price lower. New sponsorship wasn”t even likely to suddenly arrive 20 minutes before the 9:15 ET close. Instead, it was the fast-approaching close which converted those knife-catching buyers into a mass of sellers. It”s called “capitulation.”

The last 10 minutes was actually a thorough test of Wednesday”s post-open low, whose oversold RSIs required its eventual retest. And that retest targeted at least 2039, which barely contained Friday morning”s Globex close.

None of which matters to the bigger picture. Not if Sunday night”s action retraces enough of Friday”s reaction, to greet Monday”s open from above 2054.50.

Retracing Friday morning”s plunge would at least keep alive the potential for one more new high before the bigger decline begins. Otherwise, the potential to fresh highs would depend upon absorbing the morning”s drop before the close. The alternative to rejecting or absorbing the drop is potentially very bearish.

REMINDER: No Saturday Reviews during holiday weekends. Please add any questions to this post”s comments section. The chaRTroom will be accessible for Sunday night”s Globex open… Have a very happy holiday weekend!