Trading Plan for 7/2

SATURDAY STRATEGY SESSION… Next week’s is only tentatively scheduled. So be sure to attend tomorrow if you have stock requests requiring extra attention. Oh, and we’ll probably talk about the market, too.

Pattern points… (Setups and technicals)[pay]
A perfect storm kept S&Ps trending upward throughout Friday. Several perfect storms, actually.

Technicals — Thursday’s sellers had accelerated the expected pullback, and were satisfied at its 1306.50 target. The close recovered back above its morning low to prevent sellers from gaining traction. Then the overnight dip held its 1316.00 pullback limit. …

Mechanicals — End-o’quarter portfolio window dressing brought money off the sidelines. Fridays are already nearly impossible to reverse their initial trending. And having trended up to fresh highs, the position-squaring window produced a short-squeeze…

Fundamentals — Italy, Spain and Germany…

That last-minute short-squeeze was signaled above 1351.75, after a corrective dip triggered under 1351.50 fell only 6 ticks. The cash session close barely touched 1357.00 to fulfill the required retest of the prior week’s overbought RSIs. A post-close spike up touched 1359.50.

1359.75 was likely to be touched while retesting the prior high. Coming within 1 tick will suffice as much as did Thursday’s 1306.50 low. There was no hold-long or hold-short through Friday’s close. If anything, the pattern is more vulnerable to retracing all of its last half-hour surge from 1350.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
It is silly to try stepping in front of a freight train barreling down the tracks, even if you think it is out of coal. There is still room to probe higher at 1364.00. If 1357.00 were going to be rejected, then it should be obvious by Monday afternoon. Otherwise, there is limited time to reverse down before Wednesday’s holiday, a “mechanical” influence that can marginalize sellers.[/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.