Looming weekend stopped Friday stock index decline

Price action and setup analysis

If Friday morning’s drop had happened any other day… then would it have attracted sponsorship to extend down through the noon hour? It’s a trick question. While the weekend’s impending illiquidity could be blamed for inhibiting new sponsorship from reinforcing the morning’s sellers, the drop might have been exaggerated by sellers acting prematurely or speculatively.

Pattern points… (Setups and technicals)

Friday’s bias environment and last 60-90 minutes each probed deeper under the noon hour’s 1689.50 exit. Haven’t seen that in awhile. The last window has probed under the bias environment’s low, or one of the two windows has probed under noon hour’s exit. But Friday afternoon essentially trended down.

Not that the trending was very productive. But the bias environment’s 1692.25 high was retraced down to 1686.75 before the cash session close, and down to 1685.50 after it. That was all without much effort by sellers, considering that RSIs avoided becoming oversold.

Closing any lower could have suggested a hold-short, although the illiquid weekend exposure is difficult to justify. Regardless of the timing, there are more signs of thin air beginning at 1696.50, and more instances of failing to recover it. Without an active sell signal, there remains potential to probe fresh highs, although rallying from so low could discover valuable buying pressure has been expended just when it is needed most.

What’s Next… (Outlook and opportunities)

Join us Saturday morning for the weekly Strategy Session at 9:30am ET. We’ll look at the bigger picture much more comprehensively, discuss setups that occurred during the week, and game-out possible opens for Sunday night and Monday morning. Any individual stock chart requests will be analyzed, too.

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 http://IfThenSignals.com.

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