Trading Plan for 7/17

When there is a likelihood… to trend and no trending develops, the following session is likely to compensate for the delay. Monday’s session was likely to trend, and did not. Since its direction was likely to be up, does that mean trending down is not an option?

Pattern points… (Setups and technicals)[pay]
Tuesday can still trend down, but probably only by gapping down. Monday’s sellers gained no traction for their efforts — and the session was pretty much all their effort — so shallow opening weakness is likely to resolve up.

Sellers failed multiple intraday opportunities to regain control. Bouncing to fill the open’s gap allowed a break under the interim low to be bearish, but a break under the interim low was avoided. Ranging exclusively within the prior session’s range was itself a failed selling attempt.

Monday’s ranging was not quite “ineffectual pessimism,” and it wasn’t impatient buyers. Perhaps it was anxiousness ahead of Bernanke’s testimony Tuesday morning. Regardless, the burden of proof remains on sellers.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Overbought RSIs at Monday morning’s 1342.50 high require a retest. Retesting it overnight and then reversing down through the open could be very bearish near-term, with a lot of room below for only a correction. It otherwise remains attractive for renewing the rally effort. [/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.