Stock market turn lower will be signaled by key technical condition

Price action and setup analysis

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

The rally intends to end soon… then it should be ending now. Like last week’s signal, new trend high closes tend not to happen on Fridays. That helped to anticipate this week’s dip would be recovered. A new high close must be avoided this Friday for a decline to get underway soon.

Pattern points… (Setups and technicals)

The rally has no unfinished business above. Thursday’s retest of last Friday’s 1463.00 high was all but required, and likely to be probed up to 1464.25-1465.50. Its afternoon retest wasn’t extended in time to put higher requirements into play.

The rally’s momentum is questionable. The afternoon’s retest of the morning’s highs was ongoing into the final hour and through the 3:10-3:20 window. The timing can reflect strong hands’ intentions, and status quo right then was not outright bullish.

The rally’s sponsorship is (feeling) exhausted. Not to be confused with expended, buyers have been doing the heavy lifting. A lot of buying pressure was expended into and out of Thursday morning’s test of 1465.00. The interim dip to 1455.75 was recovered entirely from its morning low.

What’s Next… (Outlook and opportunities)

None of which is bearish, except to undermine the later extension higher up to 1467.25. A new high close on Friday would suggest the same trend protection as last Friday. So if the rally intends to end soon, then it should be ending now. Otherwise, next targeted is 1469.75 and potentially 1474.25, but neither is required.

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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