Trading Plan for 7/14

[pay]About that close (How the prior session ended)
The rally’s next higher target was 1093.00, and it was probed Tuesday morning up to 1094.00. Overbought RSIs made its retest likely. Its retest held through the 3:10-3:20 timing window to signal that buyers had lost traction. A fresh high would be doomed to failure, and blip-up to 1096.00 was reversed down to 1089.25 as futures closed.

Pattern points (And technical influences)
Probing a target, and then closing back under it, indicates that the target held. The rally’s 1093.00 target held as resistance Tuesday. Closing above 1093.00 would have renewed the rally’s momentum. Instead it held as resistance by a decisive margin.

The ultimate reversal back under 1093.00 originated too late to signal that momentum had reversed down. In fact, last-minute fear ahead of INTC’s earnings motivated the dip. The immediate reaction gapped up to 1095.00, and attacked 1098.00.

Buyers won’t regain traction so long as Tuesday’s 1093.00-1094.00 highs hold tests as resistance through Wednesday’s open. Closing under Tuesday afternoon’s 1088.00 low would seal a top and start to reverse momentum down. Otherwise, sellers will remain marginalized through Wednesday’s close or Thursday’s open.

Bottom line (My underlying premise)
Front-loading the earnings season with excessive optimism will only serve to stretch the rubber band tightly for a more severe snap back down. Meanwhile, I’ll consider any long-entry opportunity that appears. But that’s all Tuesday provided, which tends to be the case near extremes.[/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.