Trading Plan for 7/22
[pay]Pattern notes.
Did it, or didn’t it? Monday’s breakout attempt relied upon Tuesday’s session for confirmation. The open’s gap up was swallowed whole, and the recovery didn’t turn positive until the session’s last half-hour. A majority of Tuesday’s range was under Monday’s 948’50 highs, which isn’t quite the spirit of confirmation.
Additionally, S&Ps peaked upon testing the afternoon’s 952’75 bias-up target. Although the bias-up signal never triggered, its target is valid resistance. The afternoon’s rally began during a no-bias environment, typically a counter-trend time to expend buying pressure. And that buying pressure was satisfied.
If not for the afternoon’s rally, there might have been pent-up buying pressure awaiting Wednesday’s open. Once again, all unfinished business is under the market, not above it. The morning’s rejection of both bias-up parameters had put into play 933’00, which is still an objective, but not currently in-play. As for resuming the rally, early strength won’t be any more reliable Wednesday than it was Tuesday. And it’s not enough to simply close positive.
Indicators and Internals.
RSIs did not reflect substantial aggressive through the last hour of Tuesday afternoon’s rally. The reaction to AAPL’s earnings actually caused 3-minute RSI to diverge negatively. It’s not enough to signal a reversal down, but it would undermine the stability of a higher high.
Wednesday’s opportunities.
The reaction to AAPL’s earnings has come within 1 point of Tuesday’s 956’25 pre-open high. This doesn’t require a retest, but retesting and rejecting its test overnight would be free to decline. Any break maintained under Monday morning’s 945’50 high would signal momentum already reversed down – whether at Wednesday’s open, entering the noon hour, or at the close. A higher close won’t mean much if it was the lower-end of a mostly higher day. And while trending isn’t indicated one way or the other, volatility is likely with Bernanke testifying again and earning still coming.[/pay]