Trading Plan for 7/20

Perhaps the rally was inhibited… by anxiousness ahead of post-close earnings announcements like MSFT, IBM and GOOG. The fresh high wasn’t rejected, not yet. But it can’t afford to rest on its laurels up here, because the high’s freshness will wear off soon.

Pattern points… (Setups and technicals)[pay]
Thursday’s theme was weak-handed buyers. The pre-open test of 1375.00 prior highs avoided gapping up above Wednesday’s 1370.50 high. The post-open surge up to 1373.75 that reversed into negative territory under 1368.00. The noon hour’s new high at 1376.00 that was retraced by the noon hour’s exit.

Not gapping up — despite having rallied into position earlier — also prevented turning Wednesday’s Expiration Indicator bullish. Only from being passively bearish to passively bullish, but buyers nonetheless failed to exploit the opportunity.

All the while, unfinished business above was neutralized at he recent 1375.00 “new Globex trend extreme” and at its 1375.50 pre-open test. Perhaps Thursday’s 1376.00 Lunch Hour high will was only a momentum peak, still needing to withstand a retest Friday. Regardless, closing beyond either end of Thursday’s range should trend in that direction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping out of Thursday’s narrowing range isn’t likely to extend durably. And gapping open Friday isn’t any likelier than any other day. For the same reason, trending can gain traction. And this being a Friday, the morning’s bias signal is likely to persist through the noon hour. Quickly reversing initial trending can be substantial with the weekend fast-approaching.[/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.