Trading Plan for 7/10

The week has begun pessimistically… but that’s not necessarily bearish. It can certainly become bearish. But despite spending the entire session in negative territory, the burden of proof is still on sellers.

Pattern points… (Setups and technicals)[pay]
Friday’s 1342.25 low was tested as support through three of Monday’s timing windows. Each test produced a bounce back up to 1346.00-1347.00 — the latest bounce was 1 point higher. Friday’s failure to close under 1346.00 had robbed its sellers of their momentum. Now Monday has, too.

Friday’s cash session close equated to 1349.00, and it was not touched intraday (only futures probed it up to 1349.75). The entire session developed in negative territory. Seems pretty pessimistic, right? Almost.

This all followed probing under Friday’s prior lows, and gapping down. It doesn’t get any more pessimistic, except for actually closing under the morning’s low. This happens to be the most important. So, Monday’s session was “ineffectual pessimism,” vulnerable to resolving up sharply Tuesday.

Monday’s sellers did leave some unfinished business below at 1339.75. Its required test is could happen overnight or Tuesday, and still recover like Friday and Monday. But failing to hold its support would simply point down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Buyers also gained no traction Monday, so extending their afternoon rally would require gapping up Tuesday. Similar to Monday’s opening setup, gapping up at all Tuesday would likely gap up a lot. Just recovering 1350.50 and 1352.00 would make 1358.00 a reality overnight.[/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.