Stock rally confirms Wednesday drop wasn't reversal

Thursday’s rally confirmed… that Wednesday’s drop didn’t trigger a trend reversal. The same session that contains the trend’s extreme tends not to also signal momentum reversing down. But Thursday’s rally left outstanding some interesting points below…

Pattern points… (Setups and technicals)

Thursday’s bias environment was exited low enough to invalidate its 1376.25 bias-up target. And the 1372.00 prior low was broken in time for a drop to 1368.00. But RSIs diverged positively at the low’s retest to recover 1372.00. The late sell-off gained no traction.

Buyers also gained no traction. The cash session close did not recover above the morning’s 1373.50 high, after having probed a higher high intraday. Friday can still trend to fresh highs, but probably only if the open were to gap up. Not gapping up would be unlikely to probe fresh highs. Probing fresh highs without gapping up would be likely to reverse and trend down.

Thursday’s gap up left a gap outstanding back to Wednesday’s 1364.00 cash session close equivalent. It will need to be filled at some point, since the it was created by an “inside day.” A test of 1350.25 also remains outstanding.

What’s Next… (Outlook and opportunities)

Thursday’s late bounce from 1368.00’s retest extended up to 1377.00 after the Globex open. This is not a “new Globex trend extreme,” not yet, so it does not require a retest. Regardless, this being a Friday, the morning’s bias signal is likely to persist through the noon hour.

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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