Trading Plan for 7/13
[pay]About that close (How the prior session ended)
Monday’s last 60-90 minutes wasn’t required to trend either way. But a retest of the morning’s 1077.25 high was likelier than another downleg. The 3:10-3:20 timing window didn’t probe fresh afternoon lows or highs. So trending wasn’t attempted until after the cash session close. It touched the morning’s high.
Pattern points (And technical influences)
The post-close firming extended to 1081.00 soon after the Globex open. Both were too late to gain traction. Monday afternoon’s price action only hovered at Friday’s 1075.00 high, which the cash session close was still testing.
When it mattered, buyers expended energy without gaining traction. And the attraction up to the morning’s high has been neutralized. Its outstanding retest could have triggered another rally attempt Tuesday.
Now another rally attempt depends upon maintaining the Globex open’s gain. A shallow dip to the afternoon’s 1075.00 “lower prior highs” would be likely to hold as support. But the late rally can be rejected by opening Tuesday back under Monday afternoon’s 1070.00-1071.00 lows.
Gapping down under Monday afternoon’s 1070.00-1071.00 lows could even form session-long decline setup. The afternoon’s narrow range undermined the setup – gapping from one end of a narrow range to the other isn’t very meaningful. But now it would measure at least 10 points.
The 1079.00-1081.00 area was likely to present a stiff challenge. Its resolution Tuesday could determine whether 1093.00 will be put into play, or if the bear market rally has ended.
Bottom line (My underlying premise)
The initial Globex gain was inspired by a favorable reaction to AA earnings, kicking off the quarterly earnings season. If sellers aren’t retaking control soon after Tuesday’s open, they might not be able to until Wednesday afternoon or Thursday morning. None of which changes that this is only a bear market rally.[/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.