Trading Plan for 7/19

If Thursday afternoon’s drop had been shallower… then it wouldn’t have triggered a sell signal. But triggering its sell signal did create a lower objective, which wasn’t met until the post-close plunge. Rather than create room to absorb GOOG’s earnings reaction, optimism let the reaction threaten to reverse the trend’s direction.

Pattern points… (Setups and technicals)[pay]
Thursday’s last low was a retest of 1682.50. This relevant level had attracted price down from the morning’s 1688.50 high, and then repelled it back up to 1687.00. So, falling back down to the afternoon’s 1682.50 low had meaning.

1682.50 was also the next higher objective above prior highs coming into Thursday’s session. It was Thursday morning’s bias-up target. Its relevance was a function of the same patterns that had triggered a passively bearish WedEX indicator. If 1682.50 were exceeded, then the bearish WedEX would invert to bullish.

Thursday’s cash session close was ranging in a consolidation supported by 1682.50. Futures reacted to GOOG earnings by falling sharply to the next lower support at 1679.25. The pattern of buyers not being done probing higher highs, but not gaining traction, lives to influence another day.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This being a Friday, the morning’s bias signal is likely to persist through the noon hour. This being expiration, trending through the first 15 minutes of volatility would be likely to extend in that direction throughout the day. These factors make it difficult for a retest of Thursday’s overbought RSIs at 1688.50 also to reverse down bearishly into and out of expiration.[/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.