Trading Plan for 7/1

If buyers are weak hands… then does it follow that weak hands are buyers? If so, then a weak-handed environment wouldn’t necessarily be bearish. That’s what marginalized sellers Monday. Except for one very interesting window Monday afternoon.

Pattern points… (Setups and technicals)[pay]
That interesting window Monday afternoon was the late retest of the morning’s 1950.50 low. It was produced by a leg already underway from 1956.00, which was no-bias trending above the 1954.50 bias-up signal. Its rejection triggered a sell signal under 1953.50 that eventually fulfilled the low’s retest.

What’s interesting is that the last segment was triggered after the 3:10-3:20 window had closed, and after the 3:37 position-squaring window had opened. That was weak hands. In a weak-handed environment. It was the weakest of weak hands.

Rather than preventing the market from fulfilling its objective, the weak-handed drop trapped shorts.

That would have been a very bullish story to tell for Tuesday’s open, but it didn’t stop there. Instead of leaving the pent-up buying pressure to jump start the rally, the rally already resumed into Monday’s close by surging to 1954.50.

That’s still not a new trend high close, which remains outstanding. But buyers also failed to gain traction. Despite not leaving pent-up buying pressure, fresh highs Tuesday remain possible. But they’re not in-play, so an opening dip is likelier to recover than opening strength is likely to extend.

[/pay]What’s Next… (Outlook and opportunities)[pay]
It’s a holiday-shortened week, so economic reports start stacking up. And a less liquid environment is trying to absorb them. A new high close remains outstanding, and trend extremes into a holiday tend to extend afterward. So Tuesday may be the last opportunity to produce a fresh high close in time to begin reversing down before the weekend.[/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.