Trading Plan for 7/16

It was a tough week for the market… inside and out. Manipulations in Libor and the CDS market were revealed, and another FCM revealed misappropriated funds. Banks nonetheless ended higher than where they began the week, and the FCM definitely ended the week lower.

Pattern points… (Setups and technicals)[pay]
Meanwhile, S&Ps extended the previous week’s drop sharply lower. They recovered to end flat with the prior week’s close. Despite the distracting shiny metal news stories, the market seems to have absorbed a lot.

Not really. Closing above the week’s earlier 1356.00 high would have been bullish. Recovering to only 1353.00 prevented buyers from gaining traction for their efforts. Again. So, the immediately resuming the rally all but requires gapping up.

Aggressive upside action would be likely for two reasons. First, recall throughout the week that no matter from how deep or for how the decline extended, it had already reached a stage that required its recovery to be steep and substantial. Friday’s action was in-line with the template. Second, the same template expects this recovery to form a bigger top.

The next objective of Friday morning’s 1346.00 target was 1353.00-1355.00, and the lower-end was tested Friday afternoon. Next targeted is fresh highs above 1369.00/1375.00, so long as 1346.00 is not broken through Monday’s open.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There was no Saturday Strategy Session last week due to the holiday. Be sure to join us this weekend to discuss the market’s bigger picture, and to request instant analysis of any stock situations.[/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.