Stock market price action will key off Friday's open

Price action and setup analysis

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

If Wednesday’s signal is valid… then Thursday’s session refueled its sponsorship. A lot of selling pressure was expended off of the morning’s high, so the market’s real intent should be obvious at Friday’s open.

Pattern points… (Setups and technicals)

Wednesday’s close under 1432.00 that put into play the 1400.00 objective. Recovering 1433.00 Thursday would have invalidated it. It was not recovered. Not for lack of trying — the open exceeded it, as did the 1439.25 intraday high. But the afternoon’s consolidation was resisted by 1432.00, near enough to have recovered 1433.00 if that were the intent.

Maybe buyers needed extra time anyway. Recovering 1433.00 is no longer an option. Gapping up Friday above 1433.00’s last prior high at 1435.00 would serve by proxy as if 1433.00 had been recovered through Wednesday’s close. Otherwise, a test of the 1400.00 is in-play.

If the break lower has resumed, then Friday’s open should gap under Wednesday afternoon’s ~1426.00 lows. That would compensate for what would be Thursday’s excessive optimism that spent the entire session in positive territory and never filled the gap back to Wednesday’s close.

What’s Next… (Outlook and opportunities)

In case you haven’t heard because your electricity has been out for a week, the Vice-Presidential debate is Thursday night. Last week’s surprise had a bullish effect. A favorable surprise could trigger a gap up to 1433.00-1435.00. But without extending any higher immediately through the open, the resolution remains down.

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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