Trading Plan for 7/15

[pay]About that close (How the prior session ended)
Wednesday’s close was nothing. And that was something. Closing under 1093.00 failed to invalidate Tuesday’s bearish close, so buyers have failed to gain traction on two consecutive days. Closing under 1088.00 would have resumed Tuesday’s pre-open decline, so sellers are conserving their energy. The rally didn’t resume, but a new downleg has yet to begin.

Pattern points (And technical influences)
The rally’s 1093.00 target was met Tuesday, and probed twice, but held on a closing basis. Buyers expended a lot of energy but gained no traction for their efforts. Wednesday’s test of Tuesday’s lows didn’t extend down, but it wasn’t recovered above any relevant level. Sellers chipped away at support, making it less likely to stop another challenge.

Wednesday morning’s test of Tuesday’s low stopped just short of touching what should otherwise have been probed. That was excessive optimism, and it cried out for another test. It was satisfied by Wednesday afternoon’s probe of both lows, but its shallow bounce suggests the probe isn’t done.

Meanwhile, having held Tuesday’s lows on Wednesday, the market is still within the orbit of Tuesday night’s interim highs (i.e. the INTC earnings reaction). It may yet be retested, but its retest should resolve in a downleg.

Bottom line (My underlying premise)
Buyers lost traction Tuesday and failed to regain it Wednesday, with expiration Friday. That makes it very difficult to resume the rally, and easier to start a downleg. Plenty of unfinished business below remains outstanding – from Monday morning’s oversold 3-minute RSI at 1066.50, to the outstanding bias-down signal test at 1060.50. It’s just a matter of sellers gaining traction…[/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.