Monday price action ambiguous in wake of strong gains

Market trades in tight range

Stock index, chart, technical analysis Stock index, chart, technical analysis

The week began promisingly… before the prior week had ended. Fresh highs were probed on Friday. Sunday night probed higher highs. And then Monday’s open surged yet higher. Those elements on Mondays tend either to extend the rally at an accelerated pace, or else to reject it altogether. But this Monday only ranged narrowly.

Pattern points… (Setups and technicals)

Monday morning’s bias-up signal triggered at 1390.50 was not invalidated. Its 1396.25 bias-up target became “unfinished business above.” Pessimism probably prevented its test. Three consecutive timing windows hovered just 3 ticks under it — the morning’s bias environment, the noon hour, and the afternoon’s bias environment.

Pessimism can be bullish from a contrarian perspective. The position-squaring window doubled down on the pessimism by sliding 4-5 points back down to the open’s 1389.75 low. The pessimism would triple down by gapping open Tuesday under “lower prior highs” like 1382.00.

Opening under 1375.00 would undermine the potential to probe fresh highs before reversing down. Otherwise, the potential remains alive to probe fresh highs up to 1406.00-1407.00.

What’s Next… (Outlook and opportunities)

Without much if any trending Monday, Tuesday’s session is vulnerable to the same false trending setup. More than just probing a fresh high or low, actual trending (a series of rising or falling tops and bottoms throughout a timing window) would be vulnerable to reversing into a more substantial and durable trend in the opposite direction.

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

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