Trading Plan for 7/23
If pullbacks couldn’t extend because a new high remained likely… then Tuesday’s new high allows pullbacks to extend. July 3’s holiday high could not qualify as a trend extreme, which required its eventual retest. Tuesday fulfilled the objective. Now begins the real test, of whether the retest held, or a new rally leg is underway.
Pattern points… (Setups and technicals)[pay]
Regardless of the resolution to this fresh high, one thing is known. It is that buyers gained no traction for their efforts. Gapping up to prior highs and extending higher still traded no higher during the afternoon than at any point during the morning. In fact, the 1980.50 afternoon high was printed during the noon hour, and hardly even attacked any later.
While Tuesday’s high may be a breakout from its recent range, it hardly qualifies otherwise. So, Wednesday can’t really offer a second consecutive confirming close. Back above 1979.75-1979.50 would start to signal the rally extending anyway — to 1982.00, 1984.75 and 1997.75. But no above attraction is in-play.
Meanwhile, a hold-short almost triggered under 1977.50 by being probed before getting to within 3 minutes of the cash session close. It may have been too productive already, spiking down through the close to 1973.50, and satisfying the minimum objective of the pattern described here previously. But the reversal down remains intact so long as 1978.50 isn’t recovered.
[/pay]What’s Next… (Outlook and opportunities)[pay]
The only attractions are below, and the only momentum is up. Not maintaining the uptrend would have plenty of motivation to put in another downleg. The more that a downleg resembles one from the past two weeks — sudden, steep and substantial — the less likely that it recovers. Shallow pullbacks won’t suffice to reverse the trend down… RECORDINGS UPDATE: It looks like the recording problem has been resolved. Today’s Market Wrap is already available on the blog. Let me know if you experience any difficulty, and thank you for your patience![/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.