Friday should deliver wild ride in stock indexes

March 21, 2014 02:44 AM
Price Action & Setup Analysis

If the past two sessions are any indication of expiration… then we could be in for a wild ride Friday. Or, not. Often, extreme volatility before expiration finds everyone positioned satisfactorily into opening rotation. The key is the opening action…

Pattern points… (Setups and technicals)

Oversold RSIs from Wednesday afternoon’s 1842.00 low remain outstanding after Thursday’s rally up to 1866.00. Why bother to mention that? After all, that’s quite a ways below, not to mention being in the opposite direction. It’s still relevant because Thursday’s rally didn’t leave the oversold RSIs’ orbit.

Wednesday’s prior high, whose reaction down produced the 1842.00 oversold RSIs, was only retraced, and not exceeded. Breaking back under a prior low like 1857.50 or 1855.00 would make the low’s attraction much stronger, likely to be tested down to 1839.00.

The attraction below becomes somewhat moot by extending above 1868.25. It’s not a session-long rally trigger, but it’s back within a prior range whose re-entry would suggest re-entering the next higher range, and so on. The domino effect would lead to retesting the Employment Situation report’s 1880.00 high.

What’s Next… (Outlook and opportunities)

This being a Friday, the morning’s bias tends to persist through the noon hour. This being expiration, trending through the first 15 minutes of volatility would be likely to trend throughout 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 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