Stock market could finish Monday what Friday started

Price action and setup analysis

Stock market chart, technical analysis Stock market chart, technical analysis

If all of Friday afternoon couldn’t recover much above Thursday’s close… is it credible to expect sudden strength Monday morning? It’s not un-credible, especially since an entire afternoon was spent ranging narrowly sideways, and not reacting down. But the rally must resume without delay to better ensure its objectives.

Pattern points… (Setups and technicals)

Friday’s open didn’t gap up, but the likely scenario for gapping down was fulfilled. Tests of both bias-down parameters were rejected through 10:15, putting into play tests of both bias-up parameters. That leaves “unfinished business above” at 1520.25 and 1526.00. Friday afternoon’s bias-up signal was slightly dubious, but not suspicious, and anyway valid, leaving its own unfinished business above at 1520.25, too.

Meanwhile, this was the second consecutive Friday without a new high close. The tactic is employed by rallies to maintain their momentum into the following week. This doesn’t preclude there being a new high, but it does make it less likely, or less likely to be maintained. Friday’s rally did leave “unfinished business above.”

Notice that bonds held firm again despite stocks recovering, while Gold was rocky and at least temporarily probed new lows. This sort of action preceded the original trend change signal two weeks ago. Very interesting now, since the setup tends to be followed by a second one — or, at least a more substantial trend — when the first signal is brief. The last one was brief.

What’s Next… (Outlook and opportunities)

Please join us for the Saturday Strategy Session at 9:30am ET, linked from the sidebar. Among last week’s highlights, in retrospect, were to reiterate that last Monday’s session was likely to decline sharply, and to express suspicion that GRPN had delayed for too long its recovery above prior highs. Bring your stock requests.

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

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome