Trading Plan for 7/1

[pay]About that close (How the prior session ended)
Having hidden their intent through the afternoon’s bias environment, sellers would need to compensate for the delay. They did. The last hour plunged 16 points to new lows. A last-minute retest of the low neutralized its oversold RSIs, narrowly avoiding a relatively clear signal for holding short overnight.

Pattern points (And technical influences)
Buyers weren’t gaining any traction for their efforts Wednesday. Sellers had to regain control by the close to avoid being marginalized through the weekend. Done.

Sellers could have waited until Thursday’s open to regain control by proxy, gapping down to new lows. By the same token, buyers can still invalidate Wednesday’s late decline by gapping up above prior lows. Otherwise, one word sums up the rally’s prospects. Done.

Last Monday’s close was the first in two weeks of higher highs to close under a prior session’s low. That signaled the trend reversing down. Tuesday’s close was a new low close for the decline from April’s high, and Wednesday’s lower close confirmed. The theme since last Monday has been more and more market participants gradually realizing the rally had ended. Now that theme is done.

The next lower target area is 1003.00-1010.00. Unless 1045.00 is recovered without delay Thursday morning, then 990.00 could be tested by week’s end. And the selling still wouldn’t be done.

Bottom line (My underlying premise)
Another market theme forming has to do with econ reports painting the picture of a slowing economy. Fear ahead of Thursday’s full calendar could be responsible for Wednesday’s late plunge. But the real issue is how this macro deterioration influences the coming earnings announcements, and the warnings that will accompany them.

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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.