Weak hands push market higher but technicals hold

Price action and setup analysis

If Friday’s late surge had originated earlier… then it could have probed prior highs and also rejected them before the close. The late break higher was weak hands, but sellers have yet to appear.

Pattern points… (Setups and technicals)

It’s a new trend high close on a Friday. That means this is probably not THE high close for the trend, since trends just don’t end on Fridays.

I say “probably” instead of “absolutely is” because the 1753.75 cash session close was under Tuesday’s 1754.50 intraday high. A momentary surge to 1755.75 came after the close. Intraday buyers did nothing new they had not already done. The new high close may actually be just noise within the range. Closing higher would have been more reliable, but meanwhile it gets a benefit of the doubt.

“Probably” applies instead of “absolutely” also because Friday wasn’t accumulative. Its late surge was enjoyable and predictable, the mechanical effect of being positioned at 1751.75 resistance when it was too late for countertrend sponsorship to appear. But the session’s anemic advance was of the same breed as Wednesday absorbing sellers without then rallying, and Thursday morning’s ranging that grudgingly firmed into the close.

The air is thin at high altitude, and altitude is a moving target for markets. So, we rely on turbulent behavior to tell us if the upside may be getting limited. None of which is a sell signal, but all of which makes the market more responsive to negative developments.

What’s Next… (Outlook and opportunities)

Join us this weekend for the Saturday Strategy Session at 9:30am ET. We’ll be skipping the next two weeks (I’ll be broadcasting from the road), so be sure to attend for a bigger picture discussion and stock review.

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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