Weekend squabbling over the EFSF… resembled a GOP candidate’s tax plan. Merkel said , “Nein, nein, nein,” and Sarkozy said, “E-neuf, e-neuf, e-neuf.” Sunday night’s open gapped down nine points (okay, almost eight, to 1226.75). None of which mattered, not ultimately, as the rally resumed up to 1252.50.
Pattern points… (Setups and technicals)
The rally’s next higher objective above 1221.75 at 1245.00 was tested. This is despite no two consecutive closes above 1221.75 putting it into play. Closing decisively just once above 1232.50 would have sufficed, but Friday’s close above 1232.50 was too late to be decisive.
That didn’t prevent the rally’s resumption or 1245.00’s test, but it does underscore the sponsorship’s impatience.
1245.00 was also the morning’s renewed bias-up target, and it was tested soon after being put into play. This necessarily tested the overnight high’s 1242.75 Globex trend extreme to neutralize its attraction, too. None of which attracted stronger sellers.
The last half-hour’s two dips attacked 1245.00 to within 1-2 ticks without touching it, which reflects more excessive optimism. But it held, so sellers remain patient.
Nevertheless, a second consecutive close above 1245.00 would next target 1265.00 and potentially 1280.00. Closing under 1226.00 would trigger a new downleg, confirmed under 1221.00-1222.00. Any shallower pullback would undermine sellers from gaining traction
What’s Next… (Outlook and opportunities)
While a gap down is always possible, almost no gap down Tuesday would be able to gain traction for a more substantial downleg. A durable immediate reversal down wouldn’t be very immediate at all, and would require expressing just a little more optimism Tuesday morning.
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.
Rod David develops analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He primarily analyzes S&Ps, generating several round-turn candidates daily. Rod publishes "Trading Plan" and more each session at the blog http://IfThenSignals.com.