Stock market attempts trending amid low volume

Price action and setup analysis

If not for Thursday’s lower volume… then would Wednesday morning’s surge have left a higher objective outstanding to keep its momentum pointing higher? It’s impossible to know, but I suspect that strong hands would have refueled Thursday by retracing, instead of hovering optimistically.

Pattern points… (Setups and technicals)

Did I mention that Thursday would be challenged by lower-volume? Or, that this would undermine setups and signals? I did? Good. So, the only surprise about Thursday’s price action should be that trending was attempted at all.

The open’s two pushes higher were maintained just long enough to trigger bias-up. But that was retraced back into a 1653.50-1655.50 range which absorbed breakout attempts through the close. Neither end of the range was probed by more than 3 ticks for more than 3 minutes before reversing back to the range’s other end.

Since greeting Wednesday’s noon hour at 1653.25 resistance, every subsequent timing window only ranged sideways. The exception is Thursday morning’s bias timing window which triggered bias-up, but the bias environment was exited back at Wednesday’s highs.

Buyers still had enough traction to prevent a downleg. A failed downleg would have fulfilled the equilibrium setup — after Thursday morning’s failed rally attempt — that is usually followed by stronger trending. So, delaying a durable trend either was self-defeating if its direction is up, or self-preserving if its direction is down.

What’s Next… (Outlook and opportunities)

Regardless, it seems “ineffectually optimistic” not to have expended selling pressure in a lower-volume environment that could have dismissed it as weak-handed. Not to mention ahead of Friday’s Employment Situation report, that could have dismissed it as contrarian. An initially favorable knee-jerk reaction isn’t the only path to probing fresh highs without gaining traction. Not that fresh highs are required before trending down.

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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