Trading Plan for 7/24

[pay]Pattern notes.
It’s not necessarily distributive if probes of higher highs don’t immediately extend higher. It’s just not helpful if those probes haven’t extended higher when timing windows lapse. That was the case with Thursday afternoon’s narrow upward slant.

The morning’s surge gave buyers every excuse to be expended, or for sellers to be marginalized. A probe of 976’00 soon after the noon hour was hampered by the afternoon’s no-bias environment. This bias had lapsed when Thursday’s last hour retested 976’00. Yet, despite no bias constraints, the retest of 976’00 still didn’t break higher. The rally’s only justification for running in place would have been that its buyers were being patient. That excuse dissolved when the noon hour’s low was retested into the close.

None of which meant that sellers had retaken control. A positive reaction to post-close earnings from AXP, AMZN, MSFT would have trapped Thursday’s late sellers to jump-start the morning’s rally. The actual gap down to 963’50 still doesn’t give sellers traction. Meanwhile, buyers have lost traction, and they don’t regain it without closing above 975’00.

Indicators and Internals.
Technicals deteriorated into the afternoon’s highs, leaving no unfinished business above. The first hour of post-close trading has already seen deeply oversold RSIs start to improve. A corrective bounce not underway into the evening could require a much deeper dip, first.

Friday’s opportunities.
Back above 966’25 would target “higher prior lows” at 971’00. Probing under 962’25 while RSI deteriorates could find Friday’s open back at Thursday morning’s 953’00 buy signal. These parameters can be influential overnight. The post-close reaction doesn’t necessarily invalidate Thursday morning’s rally. Probing 971’00 as resistance but closing back under it would equate to being a sell signal. Intraday strength that tests 981’00 and reverses down to close under 971’00 would equate to several sell signals. [/pay]