Technical setup left door open to stock market drop

Friday’s bearish pattern didn’t prevent… probing higher highs Sunday night. But it left the rally vulnerable to reversing down. Which Monday’s open exploited. And which Monday’s session extended. And which the extension still did not fulfill.

Pattern points… (Setups and technicals)

Monday afternoon’s 1242.00 bias-down target became “unfinished business below” when the bias environment was exited under the 1248.50 bias-down signal. Subsequent action probed down only to 1243.50, leaving the 1242.00 objective outstanding.

Monday’s last hour was entered below all prior intraday timing windows’ lows, a setup that is very unlikely to reverse up. Reversing it up tends to be done very aggressively, and still not necessarily durably.

In fact, potential for a short-squeeze had been mitigated already by exiting the afternoon’s bias environment under prior highs. Already recovering 1250.50 by 2:30 would have opened the door to a recovery.

1250.50 held as resistance through the cash session close, which equated to 1249.25. A post-close surge attacked 1253.00. But any break under 1248.50 would be vulnerable — if not likely — to resuming the drop. Bounces meanwhile have room up to 1257.00 before suggesting that another rally leg may be underway.

What’s Next… (Outlook and opportunities)

News flow gets very interesting Tuesday. But not trending on the earliest news may be deaf to any later news.

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.

About the Author
Rod David

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.

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