Stock indexes near retest of bullish extremes

Price action and setup analysis

If Thursday afternoon had not printed fresh session highs… then the last hour would not have been required to slide so sharply. A shallower setup could have undermined buyers, or prevented them from gaining traction. But both extremes of optimism and pessimism are very expressive as a retest of the highs is threatened.

Pattern points… (Setups and technicals)

Thursday’s probe above 1577.75 tested 1583.35. And then some. The probe above 1583.35 retested the two-week old high. Sort of. I’ll try to explain, but know in advance that there are two sets of conflicting signals.

Closing above 1577.75 puts into play a retest of two-week old high. That was 1592.50 intraday, but its close was 1588.00. Thursday’s high was 1588.00. That doesn’t fulfill the buying pressure unleashed by closing above 1577.75, but it does neutralize the high’s attraction. In other words, there may still be some push from below, but not any pull from above.Conflicting signals.

Meanwhile, buyers gained traction only for closing above 1577.75. But buyers gained no traction for having rejected Thursday afternoon’s 1588.00 high to close back under its 1583.25 noon hour low. Also conflicting signals.

A rally to fresh highs above 1592.50 is possible, but would likely fail — on the day of actually probing fresh highs. Exiting the open under Wednesday afternoon’s 1571.00 low would invalidate the bullish signals, leaving only the bearish signals intact.

ABSENCE ALERT: I will not be available until Friday afternoon following the First Trade blog post, and the pre-open Market Tour will not be held. I hope at least to update the morning’s Bias Parameters, and to publish afternoon Bias Parameters, if not also comment at some point on the open’s pattern.

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