Wash, rinse, repeat… Without gapping down, can sellers hope to regain traction? Not gapping down Monday made a rally likelier than a decline. There was no decline, but hardly much of a rally. Will the same conditions apply to Tuesday’s open?
Pattern points… (Setups and technicals)
If Monday afternoon’s action did nothing else, at least it confirmed that 1277.00 is relevant resistance. Recovering from the open’s test of 1272.25 had already peaked at 1277.00. Recovering from the morning’s later test of 1270.00 finally revisited 1277.00, too.
Unfortunately, Monday afternoon’s action did nothing else.
At least 1277.00’s retest did nothing else, too. Despite revisiting it with an hour remaining in the session, the reaction down barely tested 1275.00 as support. And now two hours past the close, 1275.00-1277.00 still contains price action.
Remember, not gapping down Monday kept alive potential to fresh highs. Fresh highs that would be vulnerable to rejection. Before I left at mid-afternoon, I pointed out a new wrinkle: Delaying a probe of fresh highs until late-afternoon would be more difficult to reject.
Consider it another missed opportunity by buyers to exploit weak sellers. Holding fresh highs through the close would have been a breakout. But buyers were too weak to do it. Potential to probe fresh highs may yet remain alive — so is the potential to reject them.
What’s Next… (Outlook and opportunities)
Gapping down or quickly breaking under 1271.00-1272.00 would still be credible for extending down. As seen Friday morning and now also Monday morning, not maintaining the break through a relevant window would become likely to recover.
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.