Thursday's stock market stops short of big push

Price Action & Setup Analysis

If Thursday afternoon’s bounce had extended just a little higher… then it might have marginalized sellers. Having that opportunity but not fulfilling it should be a cause for concern.

Pattern points… (Setups and technicals)

Thursday’s early rally peaked at resistance and left no unfinished business above. Its gap up to 1837.75 was retraced to within 1 tick after an interim dip touched Wednesday’s highs as support. Its attraction is neutralized.

Closing back above Wednesday’s highs and preferably above 1836.50 would have greeted Friday’s Employment Situation report from strength. That would have been likely to absorb an initially negative knee-jerk reaction. A reaction down could still be absorbed, retraced and reversed up, but not reliably.

Thursday’s reaction down wasn’t rejected. Probing under Wednesday’s lows has left the pattern vulnerable to extending down. There is an attraction outstanding at Monday’s 1821.50 close. Already having probed a fresh high in the interim, returning down to 1821.50 would be likely to extend down much more substantially.

What’s Next… (Outlook and opportunities)

Meanwhile, Thursday’s close was again at least consolidating around the same 1831.25 that defined the prior two closes. That’s similar to the year-end ranging that closed persistently for three sessions around 1836.50. Closing between the two won’t be any more vulnerable to resolving in either direction. But an early breakout would be credible for extending in that direction.

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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