Friday's Market Minute: Day Of The Doji

S&P 500 Futures once again are struggling to break above the 3,000 level. Although the index has risen by about 1% this week, virtually all of the gains were from Tuesday’s surge on Trade War optimism. The rest was largely intraday chop on below-average volume. Current prices also happen to be near the upward boundary of a longer-term symmetrical triangle pattern, sloping downward from the all-time highs in July to the more recent highs in mid-September.

Meanwhile, Nasdaq 100 Futures ended yesterday with a spinning top candle pattern, while the Nikkei 225 contract (/NKD, which represents the leading Japanese equity index and typically shows high correlation to the /ES and /NQ) saw a doji candle on Wednesday followed by a spinning top yesterday. A doji is when a candle opens and closes at the same level, while a spinning top is when prices close almost unchanged with long upper and lower shadows. Both are often regarded as signs of stalling momentum, especially when appearing after a strong directional move.

Monthly option expiration also could be a driver for heightened volatility into the close today, as could skittish traders concerned about holding positions into the weekend while Trade War tariffs and Brexit negotiations are still so murky.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

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