What's next after Thursday fails to extend stock market rally

Price action and setup analysis

If global markets rallied after the FOMC spike up… then will they decline overnight after Thursday failed to extend the rally? S&Ps resuming or extending their rally into the weekend might depend upon global markets ignoring Thursday’s pullback.

Pattern points… (Setups and technicals)

Meeting a target to within 3 ticks is close enough to neutralize its attraction. Attacking the 1712.50 objective down to 1713.25 — which was put into play Thursday morning at 1723.50 — was close enough to neutralize it. No rally exploited that, so 1712.50 may still be tested, especially if Friday’s open is not already rallying.

Expiration’s open is otherwise impossible to call. All the more so with this one, after spiking up so substantially after Wednesday’s FOMC news. Expiration’s post-open price action can be very predictive, but the opening print and post-open direction are wild cards.

That FOMC spike up is why the passively bullish WedEX indicator is at all bullish. Triggering the signal two hours earlier would have made it passively bearish. It would not be surprising for the signal to invert. But that would require an inversion signal, and expiration is otherwise biased upward.

What’s Next… (Outlook and opportunities)

A shallow opening dip or bounce that holds 1707.00-1721.50 would likely be range bound for the balance of the day. An early break beyond either end of that range, or just putting into play a test of either end, could keep trending through the afternoon.

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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