Trading Plan for 7/13

Uh-oh, Friday the 13th… Despite the ominous tones, the date does not make stocks any less lucky or likelier to plunge. Dates don’t really have that effect. This one doesn’t have to, since the pattern already makes that possible.

Pattern points… (Setups and technicals)[pay]
Thursday’s sell-off retested Wednesday’s low within limits, expending as much selling pressure as possible without sellers gaining traction for their efforts. If that doesn’t sound familiar enough, the reaction up already expended a lot of buying pressure.

And Thursday’s buyers also gained no traction for their efforts. Relevant resistance levels were recovered — but still being tested during timing windows, and not cleanly recovered. Those were weak-handed buyers.

So, once again, intraday drops to new lows are satisfying selling pressure without putting into play lower targets. Buyers are exploiting their exposure by rallying, but not capitalizing by gaining traction. (Review the Market Wrap recording for details of what price action reveals this.)

A rally can still emerge Friday. It would begin the same way as all rallies that follow buyers gaining traction, by gapping up.This being a Friday, and buyers having failed to gain traction for their late effort, resuming the decline could extend sharply lower into the weekend.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Opening above Wednesday’s 1339.50 prior highs would target 1346.00, and be vulnerable to a much bigger short-squeeze into the weekend. An interim dip could still visit 1326.50 or 1322.00, even if only overnight. Failing to hold its test would be more vulnerable to trending down into the weekend.[/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.