Stock sellers gain traction on Thursday

Low failed to recover, setting up weakness

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

Wednesday night’s rally reacted to its cash session sellers not gaining traction for their efforts. But that only attracted more sellers for Thursday’s open. And they gained traction.

Pattern points… (Setups and technicals)

Wednesday’s 1404.00 low probed last week’s “lower prior highs.” Thursday’s 1398.00 low did, too. But Wednesday’s low recovered, where Thursday’s low did not. The afternoon’s bounce peaked at 1403.00, then settled back to 1400.00.

It doesn’t preclude another attempt to test Tuesday’s 1419.00 opening gap up — like Wednesday’s 1418.00 tried. Now its test would be much more likely to reverse back down. A rally back into Tuesday’s range should begin by gapping up above Thursday’s 1405.00 noon hour high, preferably recovering 1407.00 through the opening 15 minutes of volatility.

Gapping up would reject Thursday’s close under relevant support. Having just closed under relevant support, the open could resume dropping at an accelerated pace — especially with the weekend’s illiquidity fast-approaching. Absent a gap up or an opening plunge, Friday’s session would be most vulnerable simply to drifting lower into the afternoon, and not to drifting upward.

What’s Next… (Outlook and opportunities)

This being a Friday, the morning’s bias signal is likely to persist through the noon hour… Reminder: This weekend there is NO Saturday Strategy Session. Please request any stock analyses intraday.

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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