Trading Plan for 7/2

[pay]About that close (How the prior session ended)
The likelihood of reacting poorly to the Employment Situation report depended greatly upon closing under 1018.00 Thursday. But the entire afternoon ranged sideways with only one dip under 1018.00. The 3:10-3:20 timing window failed to signal any trending. Recoveries were unable to gain traction above unchanged levels.

Pattern points (And technical influences)
The complete recovery from Thursday’s sharply lower lows is not necessarily bullish. A lot of energy was expended, but buyers didn’t gain traction for their efforts.

And that’s really the question: What was underlying Thursday’s bounce? Either it failed to gain traction because its purpose was to refuel sellers, or because of pessimism ahead of Friday morning’s pre-open Employment Situation report.

The first premise has been the premise. Sellers gained traction at Wednesday’s close to allow trending into the weekend. Extending down Thursday, is confirmation. Buyers failing to gain traction doesn’t invalidate the premise.

The second premise must be considered, too. Thursday’s drop fulfilled a lot of selling pressure at 1007.00. It was thoroughly tested, and launched a complete retracement. Not gaining traction could be due to pessimism ahead of Friday’s report – which is potentially bullish from a contrarian perspective.

Bottom line (My underlying premise)
We’ll know soon enough. Either way, there is potential to trend sharply intraday. Recovering ahead of a three-day holiday weekend would be likely to lose momentum by noon. But new trend lows on a Friday morning could extend through next week’s opens.[/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.