Friday’s outsized gains didn’t last the weekend… but Monday regained them. That didn’t do the rally any favors…
Pattern points… (Setups and technicals)
Sunday night’s sell-off to 1330.25 did not remain low enough for long enough to gain traction. The open had already recovered back above Friday’s 1333.25 low. Monday’s session was contained entirely within Friday’s range.
Too bad. Sellers gaining traction would have probed prior highs back down to the 1329.00 area. Rallying back into Friday’s range from that much of a pullback would have been relevant. Instead, rallying back into Friday’s range from Sunday night’s shallower momentary pullback was just noise.
Monday’s recovery encountered much resistance from the gap back to Friday’s 1338.50 futures close and by retesting Friday morning’s 1339.75 high. A last-minute surge probed a fresh session high, but it stopped pessimistically short of 1341.25, Friday’s cash session close equivalent.
That pessimism suggests Friday’s high will be retested. As long as we’re in the neighborhood, why not also test 1343.00-1345.00. It’s a rhetorical question.
What’s Next… (Outlook and opportunities)
Probing fresh highs, or not, a reversal down could still gain traction and be very productive. Reacting down from 1343.00 would create at least a corrective drop. But gapping down under the 1329.00 area first would suggest that 1343.00 need not be tested, at all.
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.