Trading Plan for 7/10

If the rally wanted to entrench itself… then it should have allowed Wednesday to retest Tuesday’s low. Already expending energy to barely retrace Tuesday’s drop may be missing that optimism just when it is needed most.

Pattern points… (Setups and technicals)[pay]
The FOMC Minutes knee-jerk reaction down to 1950.50 was recovered back up to and through its 1964.00 origin. That recovery was still supported at the close by the morning’s 1965.25 highs. That’s actually still testing the morning’s highs, despite closing higher.

Meanwhile, the final hour wasn’t entered above the noon hour’s high. And the 3:10-3:20 timing window failed to maintain a fresh high. Buyers gained no traction for their efforts, i.e. they were already rewarded for their efforts, and attracted no new sponsorship.

The door remains open to probing under Wednesday’s low to 1956.00-1957.00 or lower, if not also under Tuesday’s ~1953.25 low. Gapping down isn’t necessary, just exiting Thursday’s open in decline — preferably under 1962.50.Extending higher without a detour must begin by gapping up above Wednesday’s 1968.25 high. That’s 2 points above the cash session close, and 1 point above the futures close. Follow-through might not hesitate until retesting last Thursday’s 1978.00 high up to 1981.25-1982.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Buyers aren’t gaining traction for their intraday efforts, so any resistance test is going to be vulnerable to reversing down. The next higher is 1971.25, and any higher would essentially marginalize sellers. Otherwise, dipping Thursday could form a more substantial base to launch a new rally leg.[/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.