Trading Plan for 7/18
If the prior high’s retest is complete… then how quickly should the downleg develop? Very. The pattern in-play did not require a new high close before reversing down. Not actually probing new highs is only a little problematic since the high close has been retested. But reversing down still isn’t optimal, not without reversing down aggressively.
Pattern points… (Setups and technicals)[pay]
See if you can spot the pattern. First, sellers gained traction Thursday afternoon. The bias environment was exited under the noon hour’s high despite having probed above it. The final hour was entered under the bias environment’s low. And the 3:10-3:20 timing window trended down through the noon hour’s low. Meanwhile, the break under the noon hour’s low extended down more than 10 points.
Second, there is Wednesday’s bearish WedEx. It identifies which way big money is starting to lean into and out of expiration. It’s not unusual for events like Thursday’s airliner downing to accelerate those plans. Thursday’s second downleg measured 21 points, and may represent the repositioning and rolling that WedEX expected — just a little early.
The pattern is that both setups may already have largely played out their downside. The premature repricing may also be inhibiting further selling, while also attracting buyers. Their bearish signals are valid, but their time table may have inverted them to being bullish. We’ll know that before Friday’s open by an overnight rally recovering the 1960.00 area.
Otherwise, the trend remains down. This was not the first probe under 1958.00-1961.50, but it was the first lower close. It was a big drop for a Thursday, and a not recovering Friday could be very, very bearish Monday. Not reversing overnight would likely extend down into the weekend. Slightly lower lows are likely down to 1947.50, and below there would target 1931.75.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday’s reaction up from 1949.75-1950.50 support exceeded its bounce limit up to the 1954.00 area, so quick that it was barely violated. A hold-short was considered being so near to the stop, with 1947.50 being the next major attraction below. Opening near there would begin targeting 1931.75. [/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.