Trading Plan for 7/16

If Monday’s gap up had extended higher faster… then an afternoon decline would have been likely. Slow-playing the upside momentum did help to keep sellers from regaining control. But the price was a shallow gain and slope. The rally might not tolerate any near-term selling.

Pattern points… (Setups and technicals)[pay]
Monday’s session was another one of this rally leg’s rare exceptions. It actually rallied post-open. Not that fresh highs were probed intraday, but multiple timing windows were exited above prior timing windows.

And this was a session that gapped up above all prior highs, making it more difficult to extend higher. It extended higher, anyway.

The bias environment’s exit above prior highs established that any subsequent selling could be only by weak hands. So, we assume the final hour’s dip to 1677.00 was the product of weak hands. Extending down Tuesday would still be likely to recover, if only to retest Monday’s 1679.50 high.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There is an exception to maintaining this rally leg’s momentum, by rejecting the setup that signaled or confirmed the momentum. Gapping down Tuesday not only under Monday’s low, but also under Friday’s 1670.50 close, would undermine the uptrending session. The objective would be to test “lower prior highs” at 1648.00. Otherwise, the rally’s momentum remains intact. [/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.