Trading Plan for 7/23
[pay]About that close (How the prior session ended)
My two favorite parts about Thursday’s session happened at the close. Just closing the chapter on its sloppy pattern was enjoyable enough. But it was preceded by an 8-1/2 point drop that finally brought the pattern back on-track. Its pent-up buying pressure, repeatedly missing opportunities to rally, had to resolve down sharply instead. And it did.
Pattern points (And technical influences)
Thursday’s upper-end chipped away thoroughly at 1093.00 resistance. This was the bear market rally target that held as resistance last week for three consecutive days. Testing it again intraday expended a lot of buying pressure. Failing again to break higher has absorbed a lot of buying pressure.
Closing above 1085.00 would have retraced last week’s decline so much as to target higher highs above 1100.00. Thursday’s close barely held above 1085.00, so the signal did trigger. Now there’s the matter of confirmation, which Thursday’s ending drop suggests won’t be easy.
Gapping up Friday above Thursday’s 1094.50 high could reinstate the recovery attempt. Recovering from initial weakness down to 1078.00-1079.00 could reinstate the recovery, too, but would still need to close above 1085.00.
But look out below if 1085.00 fails to hold through Friday’s open. Wednesday’s 3:10-3:20 window already signaled that the purpose of rallying Thursday would be to refuel sellers. Filling the newly created gap back down to Wednesday’s 1064.00 close might act as support, but probably not as a bottom
Bottom line (My underlying premise)
Thursday’s positive close was under its morning high on a session spent exclusively in positive territory. The typical template for extending this rally is to gap up above that session’s highs. Any lesser opening strength would be vulnerable to extending down into the weekend. Regardless of which way Friday were to trend (assuming it trends at all), that trending should persist through Monday’s open.[/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.