Trading Plan for 7/11

If the rally intended to extend higher… then did it miss an opportunity with Wednesday’s FOMC Minutes catalyst? Probably, at least for extending higher. But fresh highs can still be tested intraday.

Pattern points… (Setups and technicals)[pay]
Overbought RSIs at Wednesday’s 1653.00 high were produced by a knee-jerk reaction to news. That is the definition of “weak-handed.” Overbought RSIs produced by trending are the definition of strong-handed, so that its reaction down is the product of weak hands that would require being retraced.

Meanwhile, the reaction from Wednesday’s overbought RSIs down to 1641.50 barely took 1-minute RSI oversold, and not at all the 3-minute. There is no requirement to retest its low. Bernanke’s post-close speech could successfully clarify the earlier Minutes to trigger a retest of 1653.00.

That said, the low was 1 tick above the 1641.25 overnight low, reflecting impatient buying. That optimism is potentially bearish from a contrarian perspective. And all unfinished business is below, outstanding from last week’s rally: gaps, bias-down parameters, and a sizable air pocket.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Neither buyers nor sellers gained traction for their efforts again. So, intraday trending would be likely to retrace if not proceeded by gapping open beyond a prior high or low. [/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.