Stock index support firm but price action questionable

Price action and setup analysis

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

If expiration is already influential… then is it bullish that tests of support are recovering, even though their recoveries to resistance are not?

Pattern points… (Setups and technicals)

Like the WedEx signal on (Wednesday), Thursday’s probe under 1515.00 support was recovered. Like WedEx, it was recovered back to prior highs but no higher, at least not through the close. That’s why WedEx itself was only passively bullish. Only holding another test of support is just more of the same. Thursday’s open did fail to recover 1515.00, so expiration isn’t immune from trending down anyway.

I was willing to give the rally every benefit of the doubt for extending, so long as 1518.25 held as support. It did, but not without behaving poorly during Thursday’s last hour. Timing windows failed to gain traction as fresh highs failed to extend higher. Now I’m willing to give the rally every benefit of the doubt if it is underway through Friday’s open.

Because Thursday afternoon’s pattern was likely to trend into the close, but didn’t, Friday’s open is likely to trend without delay. So, rather than patiently monitor Friday’s open waiting for a setup, any early signal would be credible for extending through the opening 15 minutes of volatility. If that’s upward, then WedEx could reinforce a squeeze into the weekend to 1533.00. Otherwise, down might know where to stop.

What’s Next… (Outlook and opportunities)

The likelihood for immediate trending Friday is doubly interesting. Trending through the opening 15 minutes of expiration tends also to entrench that trend through the close. Since volume tends to evaporate ahead of a 3-day holiday weekend, expiration’s trend would be even more controlling.

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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