Trading Plan for 7/13

[pay]Pattern notes.
Friday afternoon’s four-hour, 5-point range was triggered by noon’s recovery above 872’25 that robbed sellers of their traction. This opened the door for buyers to gain traction, but it doesn’t mean they did. Follow-through peaked 4-1/2 points higher, immediately upon touching the lowest tick of Thursday afternoon’s range. That’s not buying pressure.

The afternoon’s 872’00-877’00 range was narrow. Narrower still, compared to the morning’s wild round-trips between 869’00-880’00. Only the afternoon’s latter half challenged 872’00 support. The last half-hour faked a short-squeeze that closed back within the range.

Thursday’s ineffectual optimism was likely to gap down and then trend down sharply intraday. Overnight lows satisfied the “down sharply” requirement, and the open’s volatility satisfied the trending. But the shallow recovery left open the potential for sellers to make another run at resuming the decline.

As with Wednesday and Thursday’s open, an immediate recovery or gap up above 881’00-883’00 would be the least to expect from buyers capable of overcoming the downtrend underway. Sellers regaining control are likely to start by dropping under 871’50 to test 866’50, and any lower would set a nasty tone for the week.

Indicators and Internals.
Technicals left no unfinished business for the new week. The 3-minute RSI barely registered any extreme strength or weakness after the open. The 1-minute did become overbought a couple of times Friday afternoon, but nothing durable without the 3-minute’s participation.

Monday’s opportunities.
No econ reports are scheduled Monday, but the quarterly earnings announcements start dribbling in. The market isn’t bouncing off of lows – they’re still fresh and relatively nearby. And neither is the market chipping away at resistance. The environment does not appear to have discounted any negative surprises.[/pay]