What Thursday's technicals imply for Friday trading

Despite ranging widely around unchanged… Thursday’s session did not validate Wednesday’s last-minute break. Not directly. Invalidating the break would have extended Wednesday’s rally, and Wednesday’s rally did not extend. The burden of proof is still on buyers…

Pattern points… (Setups and technicals)

Thursday’s open needed to gap up above 1323.00 to invalidate Wednesday’s last-minute break under 1321.00. Thursday’s open held 1323.00, probing it later by 3 points before reversing back under it. Thursday’s close also held 1323.00, ranging narrowly above 1321.00 through the last two hours.

Not invalidating the late break means that it was valid — Wednesday’s buyers gained no traction for their efforts. Other than ranging sideways for a day, the pattern has yet to account for not having any traction up here. And here comes Employment Situation.

None of which precludes the market from trying to probe higher. And this being a Friday, not rejecting fresh highs through the open would be vulnerable to extending higher into the weekend.

But the burden of proof is on buyers. An initially positive knee-jerk reaction could reject its fresh high through the open by sliding sharply into negative territory. And gapping down to a fresh low would begin undoing the rest of Wednesday’s rally.

What’s Next… (Outlook and opportunities)

Where early weakness Thursday could have extended down to the 1311.00 area, now it would also target the 1308.00 area. In other words, almost any early weakness Friday is likely to become substantial weakness. But while fresh highs might push back, look out above if they don’t.

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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