Trading Plan for 7/19

Tangential influences like… quarterly earnings and Bernanke’s testimony have passed. Wednesday’s Expiration Indicator triggered only a mild signal. And the attraction to prior highs is all but satisfied. Anything else out there? Anything?

Pattern points… (Setups and technicals)[pay]
Wednesday’s late drop down to 1363.50 measured 6 points from its origin. But we knew its sponsorship was weak hands, since it did not break early enough. The 1368.00 bias-up signal was still being tested when the bias environment lapsed at 2:30, instead of already having been rejected.

The morning’s bias-up signal was similar in principle. Despite recovering cleanly above 1362.50 through 10:15, a dip tested 1362.50 at 10:30. Its break through 10:30 would have invalidated the signal, but only if broken cleanly. The result was an extended rally to 1370.50.

Actually, the result was to put into play the morning’s 1368.00 bias-up target. It became unfinished business above when not yet tested by 11:30. That same level was the afternoon’s bias-up signal, and it was not rejected — not cleanly — through 2:30. Its 1374.25 bias-up target remains in-play.

As there has yet to be a higher tick since triggering Wednesday afternoon’s bias-up, its failure is still possible. But probably only if Thursday’s open is trending down cleanly.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Overbought RSIs at Wednesday’s 1370.50 high require its retest, making it doubly difficult to trend down. Oversold RSIs at the afternoon’s 1363.50 low may try, but may have to wait for an early probe of fresh highs up to 1375.50-1377.50 to fail. Meanwhile, Wednesday’s Expiration Indicator was passively bearish, but that would become moot if Thursday were to close at new highs. [/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.