Trading Plan for 7/23
[pay]Pattern notes.
Yesterday’s comments in this space described why the last hour of Tuesday afternoon’s recovery couldn’t confirm Monday’s breakout attempt. Wednesday’s session traded largely within Tuesday’s last-hour range. If that wasn’t good enough for a breakout Tuesday, it certainly didn’t qualify Wednesday. The burden of proof was on buyers to confirm, and they didn’t.
Having squandered the opportunity, buyers would have been more productive by letting sellers trap themselves short with lower lows. Instead, buyers expended their energy trying to hover at recent highs. To a degree this is bearish, without actually being a sell signal.
Wednesday afternoon’s lows held 948’50 as support, whose test did nothing relevant into the close. Holding 948’25 as support Tuesday didn’t help buyers Wednesday, and it probably didn’t help them for Thursday. The only most bullish factor is simply non-bearish, in that once again sellers failed to close under a prior low.
The 943’50 pre-open low is still likely to be retested. If not recovered, then the break maintained under 945’50 would put back into play 933’00 and then lower. Rallying without first testing 943’50 could extend, but it would not be as clean.
Indicators and Internals.
Wednesday afternoon’s low narrowly avoided both the deepest oversold 3-minute RSI, and simultaneously oversold 1-minute and 3-minute RSIs at the low. Not that this produced any sort of bounce, since the last hour remained glued to the 948’50 area. Retesting Wednesday afternoon’s low without being required would mean durable sponsorship had probably arrived. Any dip under 948’50 that doesn’t recover through the open will likely have extended down multiple points already.
Thursday’s opportunities.
A close under 948’50 would have made Thursday’s open likely to gap down under 945’50, and extend down. An early break under 945’50 Thursday would still be likely to trend down. There’s no requirement to gap or to trend in either direction. But a gap above 954’50 would be likely to trend up throughout the day. Jobless Claims is pre-open, and Existing Home Sales is 30 minutes after the open. Meanhile, the earnings deluge continues.[/pay]