Stock market early morning bias key to follow through

What to expect following Thursday drop and reversal

Thursday’s opening drop to fresh lows… avoided trending down. But that doesn’t mean the balance of the session has reversed the trend upward…
Pattern points…

(Setups and technicals)

Thursday afternoon’s rally began during the no-bias environment. But it wasn’t “no-bias trending,” since the 1392.00 bias-up signal was not exceeded until the bias environment had started lapsing. Slowly creeping up to 1392.00’s resistance left little time for sellers to generate sponsorship.

Exiting the bias environment above prior highs signaled the buying pressure was credible for extending higher. Entering the session’s last hour above the bias environment’s 1393.75 high would have targeted positive territory above 1400.00.

That last element would have been very bullish.

That last element did not develop.

Instead, the bias environment’s 1393.75 high was still being tested at 3:00. At least 1392.00 was still holding as support to allow another buy signal. And it did trigger, by trending up to fresh highs through 3:10-3:20.

But the later pattern did not require probing positive territory, and its 1399.75 target was met at the afternoon’s high. Its buying pressure was fulfilled. This is after the earlier pattern narrowly missed triggering, at all.

Thursday’s high did stop 1 tick short of filling the gap back to Wednesday’s 1400.00 close. That tends to reflect pessimism, so extending higher immediately at Friday’s open would be credible for extending higher into the afternoon to test 1410.00. There is otherwise no bullish reason for another dip, so any immediate weakness Friday would target new lows at 1385.00 and lower.

What’s Next… (Outlook and opportunities)

There is no requirement to trend at all from Thursday’s close, and a choppy sideways range is possible. 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.

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

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome