Is there more room for an upside bounce in stocks?

Price Action & Setup Analysis

If Thursday’s rally included optimism ahead of Friday’s report… then did it leave any room for a “positive” surprise?

Pattern points… (Setups and technicals)

If Thursday’s rally was inspired by expectations for Japan to continue spending on QE, then we can assume that is pretty fully discounted. The session trended up throughout the day. Substantially.

No doubt, some of that inspiration was for a positive reaction to Friday’s Employment Situation report. The actual data matter not. Its comparison to expectations — and whether that will affect policy — is more influential.

Surely, the latter part of Thursday’s rally that came late in the day was inspired by not already reversing the morning’s gain. The assumption being that optimism and momentum would combine for extending the rally in reaction to the Employment report.

The thing about wishful thinking is that sometimes wishes do come true. Monday’s plunge could be retraced another 10 points higher up to 1780.00, and still be considered a correction. So, a bearish resolution need not behave pessimistically right away in order to resolve down later.

What’s Next… (Outlook and opportunities)

This being a Friday, the morning’s bias signal tends to persist through the noon hour. And countertrending sponsorship tends not to appear in the afternoon. Triggering bias-up can marginalize sellers for the day.

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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