Trading Plan for 7/14

Unfinished business above was quickly neutralized… at Wednesday’s open, far above Tuesday’s close. Brief higher highs reacted back down to session lows, and back to Tuesday’s close. Expiration volatility has begun already.[pay]

Pattern points… (Setups and technicals)
Wednesday’s opening rally was doomed to failure, but could have limited its failure to 1320.00. Its next lower objective was 1314.00, which normally could have limited the failure, too. But it happens that simply revisiting 1314.00 triggers a bigger bearish pattern, suggesting a retest of Tuesday night’s 1295.25 low.

Meanwhile, the 1311.00-1312.00 pivotal low (the low prior to Tuesday’s 1308.75 actual low) is being retested, which all but requires testing the actual low.Wednesday’s expiration indicator would have been bearish had the pivotal low already failed. But any lower close Thursday would confirm its bearish intent.

There are two paths higher. One is immediate and temporary, while the other would originate from fresh lows and be very durable. Recovering above 1316.25 and 1317.50 and Thursday’s open would target the 1323.50 area – it could even probe Wednesday’s 1327.75 high – but it would only delay the inevitable decline and exacerbate its effects. Otherwise, a test of 1295.25 that recovers to close back above 1302.00-1303.00 could retest 1339.00-1340.00 before week’s end.

What’s Next… (Outlook and opportunities)
I recorded Wednesday’s post-close “Market Wrap” in lieu of creating charts for today’s Trading Plan. Its link is here.[/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.