Jobless claims halts equity momentum

S&P 500

The intraday price action in the markets was very mixed in the morning. The S&P 500 and Dow Jones Ind. Average bore the brunt of the selling that took place after the open and continued the reaction to the early-morning data. The Nasdaq-100, on the other hand, held up extremely well and easily pushed to new highs as the morning wore on. That rally stalled as the index hit the upper channel limits at 11:00 a.m. ET. Highs were established by 11:30 ET. The pace of the rally had slowed in the index, creating a Momentum ReversalTM that triggered mid-day. At this point the S&P 500 was retesting its morning highs, which served as price resistance as well and all three of the major indices took a turn lower into the afternoon.

The downtrend on the 5 minute time frame continued into the final 30 minutes of trade. At that point, three evenly spaced lows created another Momentum ReversalTM that triggered a rebound into the closing bell. This rebound continued afterhours and took the Nasdaq-100 futures to new highs for the year within a widening triangle on the 15 minute time frame. Since this pattern took place at highs after the earlier run this week, however, it was a bearish strategy and the index futures have been heading lower since approximately 17:30 on Thursday evening. This will leave them hitting support as Friday's opening bell approaches, and the indices will favor holding a trading range on the 30-minute time frame heading into the weekend.

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