Trading Plan for 7/10
[pay]Pattern notes.
Overnight tests of Wednesday’s low all stopped within 1 tick of the ESu 1244’25 bias-down signal. The 1252’00 bias-up signal held repeated tests as resistance. That is, until a dip to 1247’50 suddenly reversed up, back to and through the 1254’50 target of yesterday afternoon’s steep drop. The retracement has already extended up to this morning’s 1259’00 bias-up target.
Extending this overnight rally above 1261’00 would start making a retest of Wednesday’s 1278’75 high likelier than not – it wouldn’t yet be targeted, just likelier. And Wednesday’s high probably won’t be retested unless a rally leg targeting 1360’00 is underway. Meanwhile, this morning’s 1259’00 bias-up target has been satisfied, along with its buying pressure.
Three news items accompanied the overnight surge: The BOE interest rate announcement, DOW buying ROH, and upward guidance from WMT. Other retailers are offering guidance before the open, so there will be opportunities to confirm or undermine WMT’s news. Jobless Claims is due at 8:30.
Indicators and Internals.
The 3-minute RSI was overbought at 1259’25 and requiring any pullback to recover and retest the high. A negative divergence there would likely produce a short-entry setup. Wednesday’s internal spreads were lopsided and sellers were much less productive than buyers, but a gap up this morning would neutralize any obligation to trade higher.
Thursday’s opening setup.
Absent too much of a reversal down during the next two hours, the cash session’s open will gap up and leave new unfinished business (the gap back to yesterday’s 1248’00 close) at lower levels. This will be added to Tuesday’s pre-open Globex trend extreme as being another anchor around the market’s neck to inhibit and limit recovery attempts. A pullback to only 1253’00-1254’00 could form a good base to launch a rally back to overnight highs.
PROGRAMMING NOTE: I will be unavailable today between 11:15-2:00. The site (both blog and charting room) will not be updated during that time. [/pay]