Trading Plan for 7/22

If the passive bearish WedEX is valid… then it should be planning some interesting action for Monday morning.

Pattern points… (Setups and technicals)[pay]
Friday’s session ranged in negative territory until the last half-hour. Until then, only the very last part of the afternoon’s bias environment had even probed above Thursday’s 1684.75 cash session close. And then only by a few ticks. That’s one effect of the passively bearish WedEX indicator.

That’s not enough.

“Passively bearish” doesn’t prevent a rally effort. It didn’t prevent Thursday’s probe well into positive territory. But similar to Thursday’s complete retracement of the morning’s gains, Friday’s late probe into positive territory should be retraced, too. WedEX influence hasn’t played out fully until Monday morning has ended.

That’s a little more interesting, since Friday’s late probe into positive territory was dramatic. The last half-hour had firmed 2 points into the 1687.50 cash session close. The next 15 minutes surged 3 more points to touch 1690.50.

That’s typical expiration behavior, and we had even discussed it in the Chartroom an hour earlier. But it’s not bearish in itself — that’s for WedEX to prove. If Monday were only to trend higher, then sellers could be marginalized until Wednesday morning.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Having trended up into Friday’s close, gapping down Monday under Friday’s 1682.00 bias environment low would trigger a “session-long decline.” Having held under Thursday’s 1688.50 high until after Friday’s cash session close, there is no new high close that would prevent extending down substantially. Only dipping back to the 1684.75 area through Monday morning would be likely to resume the rally Monday afternoon.[/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.