Friday continued its exception to typical countertrend behavior

March 30, 2014 05:13 PM
Price Action & Setup Analysis

If it weren’t Friday… then would the open’s gap up have been retraced back into negative territory, like so many others before it? Friday’s opening print extended aggressively — immediately and substantially. It was retraced back down to the opening print, which held its test, and positive territory.

Pattern points… (Setups and technicals)

Something seems different. Maybe it’s just the day of the week. Fridays are difficult to generate counter-trend sponsorship. So when the morning’s rally got ahead of itself, drifting back down to its origin only constituted noise. There was no influx of sellers exploiting an unsustainable gap up.

Whatever selling was expended Friday afternoon gained no traction for its effort. And the burden of proof IS on sellers. Had the afternoon drop not probed under the morning’s low, then Monday would be forced to gap up for a lower low to be avoided. But the rally is free to resume in any fashion.

Gapping up would be preferable for the bigger picture assumption of this leg being blow-offish. (Or, blowoff-ish. Not blow-of-fish.) Just sliding at Monday’s open would still be likely to recover from the 1840.00-1844.00 area, probably from its upper-end. Resuming the rally Monday would otherwise require gapping down sharply.

What’s Next… (Outlook and opportunities)

Join us for this weekend’s Saturday Strategy Session at 9:30am ET.

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