Lighter Volume Sell Off in the Stock Market Prior to Labor Day Weekend 

Tom Gentile

Posted in
Technical Analysis

By: Tom Gentile
September 2nd, 2022

2 mins read

The financial markets are going to be closed this coming Monday due to it being Labor Day.

This usually sees Investors and traders heading out a bit early on Friday. Also, you may hear of talk that some traders don’t like to hold options positions over the weekend due to the uncertainty of what could happen domestically or abroad that could derail the markets come Monday.

That’s on a normal w-day weekend. Labor Day brings a 3-day weekend with Monday being closed, which gives an extra day for the prospects of something weird happening that could adversely affect the markets.

Option Traders and Investors Taking Their bat and Ball and Going Home

This results in today, Friday, being what’s considered a ;light-volume day.

The markets are always right and even though prices sold off there is a chance that when everyone comes back on Tuesday, and nothing weird happened, they start buying options and / or cost average their securities due to further depressed prices from today.

Figure 1: 5-day Candle Chart on SPY
Figure 1: 5-day Candle Chart on SPY

Bearish Reversal Day

When a security closes at or near its low of the day it may lead to a continuation of that bearishness for the open the next trading day.

It does not guarantee it as any number of things can happened overnight, or in this case over the weekend, which is deemed good for the markets,

Possible Pivot Low on the Chart for SPY

It’s not an ideal pivot low as today’s close was lower than the prior days open.

Today’s price did not take out the low of Thursday, but that is maybe stretching things a bit to consider it a pivot.

The point is the price we deemed possible support at $390 is intact for now.

Figure 2: 100-day Candle Chart on SPY
Figure 2: 100-day Candle Chart on SPY

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