Thursday stock index price action approaches technical brink

Price action and setup analysis

If Thursday’s close had been any lower… then it would have been a lot lower. It should be obvious by mid-morning Friday whether that narrow escape was only temporary, or a glimpse of much bigger things to come.

Pattern points… (Setups and technicals)

So, the session that closed under 1542.50 didn’t close substantially under 1542.50, which I had suspected. Not that the cash session’s 1537.00 close wasn’t clearly under 1542.50, or the 1534.00 futures close — both reacting up from the afternoon’s 1530.75 low. But they were only testing the morning’s 1535.75 low that was itself the prior probe under 1542.50, not recovering it.

That’s not to say the morning’s 1535.75 low held as support. The 3-point range of congestion there was not recovered. So, the bounce from the afternoon’s 1530.75 low expended as much energy as possible without gaining traction for the effort. And still closed under 1542.50.

Unfinished business at the two-week old 1533.25 Employment Situation report low was also probed Thursday afternoon and still being tested at the close. But not recovered. Closing under it is irrelevant, already having closed under 1542.50.

If Thursday’s break under 1542.50 — and all that that entails — is going to be rejected, then Friday’s open must essentially gap up through 1543.00-1544.00. It can be tested as resistance and resolve down, but probably only if tested at the open.

What’s Next… (Outlook and opportunities)

The reason why gapping up to 1543.00-1544.00 can still resolve down has to do with Friday being expiration. Trending through the opening 15 minutes of volatility would be likely to trend in that direction throughout the day. Regardless, this being Friday, the morning’s bias signal tends to persist through the noon hour. Meanwhile, Thursday left outstanding oversold RSIs at its 1530.75 low that requires being retested — not necessarily 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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