Trading Plan for 7/1

Closing above 1310.00 Thursday… could have reflected strong handed sponsorship of this week’s bounce. This week’s bounce would no longer be only a bounce.  But 1310.00 wasn’t very relevant intraday, and its recovery did not become trending. Not closing higher Friday would suggest 1310.00‘s test had held, and the bounce had peaked.[pay]

Pattern points… (Setups and technicals)
The open’s surge probed the morning’s 1312.25 bias-up target by 1 point. It was not exceeded through 10:15, which would have renewed the bias-up signal. That didn’t prevent probing highs intraday, but they were all retraced to attack 1312.25.

Fresh highs after not renewing the morning’s bias-up can be bearish if not adopted by an afternoon bias-up signal. So, the afternoon’s no-bias signal effectively made trending – whether up, or down – unlikely for the day.

Either of the afternoon’s two dips to 1312.25 could have gained traction, but proved to be too late. A bounce to one last fresh high at 1317.50 released the pent-up buying pressure. It is Thursday’s only fresh high that has yet to retrace back to 1312.25. Suddenly there is pent-up selling pressure.

A pullback has room down to 1307.00-1308.00 without sellers gaining traction. Dipping under 1313.00 overnight, confirmed under 1311.25, would signal the pullback underway. Any lower would target the 1303.00 area, and would no longer be considered only a pullback.

What’s Next… (Outlook and opportunities)
Volume will start to evaporate by mid-morning Friday ahead of the three-day weekend. Any trending not signaled early probably won’t be signaled at all. By the same token, initial trending would be difficult to stop.[/pay]

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.