Trading Plan for 7/15

[pay]Pattern notes.
Monday’s optimism wasn’t so obvious Tuesday. I’m not even sure it was present, at all, or if sellers simply didn’t push back. The morning’s dip was only so productive as to probe overnight lows – and that is productive. The dip ended 3 points short of its target, with the morning’s no-bias environment pre-disposed to ranging sideways.

That was the third consecutive no-bias, and now there are four. The series’ first no-bias Monday morning was shaken off in favor of a no-bias rally. And the latest no-bias was followed by Tuesday’s 12-point gain in reaction to INTC’s post-close earnings announcement. The rally is stretching its rubber band thinly by extending higher without any refueling. Surging, spiking or gapping from a standing-stop is rarely appropriate, and the gains it produces may be steep, but not durable.

S&Ps have already printed 912’75, within striking distance of the gap back to July 1’s 919’25 close (circled green). This gap does not require being filled because July 2’s open gapped under June 30’s prior low (circled red). Back under 908’00 would confirm the test had held as resistance. The next resistance is above the gap at 922’00-924’00 (highlighted green).

Friday’s expiration may be influencing price higher. It’s help will be needed for pushing to and through 922’00-924’00. That, or an actual pullback to refuel buyers. Otherwise, excessive optimism this close to expiration can find the influence comes back to bite it in a very big way.

Indicators and Internals.
The post-close reaction to INTC’s earnings took indicators well into overbought territory, rendering them useless until past midnight. The cash session left no business unfinished.

Wednesday’s opportunities.
Overnight gaps up are rare, too rare to have predictable resolutions, other than to be proof of the optimistic undertones. Earnings aren’t as much a factor until the afternoon, in anticipation of Thursday’s pre-open deluge from the likes of JPM, IBM and GOOG (which I erroneously listed earlier as coming Wednesday). But the econ calendar is unusually steadily active throughout the morning, and into the afternoon’s FOMC Minutes.[/pay]