Trading Plan for 7/24
[pay]Pattern notes.
Wednesday’s pre-open surge to new highs and the post-open recovery to higher highs meant surprisingly little to the afternoon crowd. The Beige Book reaction was remarkably calm after the obligatory knee-jerk reaction. Earnings after the close haven’t had any further effect.
After retracing the opren’s surge through the balance of the morning, the afternoon defined itself by repeatedly testing ESu 1278’00 as support. This level is also Tuesday’s close, and its retest should have sufficed for launching a new session high once anxiousness ahead of Beige Book had passed. Wednesday’s session failed to extend not only the surge from Wednesday morning, but also from Tuesday afternoon.
The hesitation undermines the durability of any subsequent rally attempt. And it happens that Wednesday’s 1291’25 high fulfilled multiple targets, independently calculated from patterns dating back to last week’s lows. Wednesday’s pullback stopped short of signaling that momentum had reversed down, but buyers certainly didn’t gain traction on the day. It takes a lot to construe a new high as being bearish, and Wednesday’s session nearly did it.
Indicators and Internals.
Two times more NYSE up volume than down volume produced a relatively narrower ratio between advancing issues and decliners. That’s in-line with the price action, but it still obligates the market to reward Wednesday’s sellers for their relative productivity. Also attracting price lower is two oversold 3-minute RSI readings whose price lows have yet to be retested.
Thursday’s opening setup.
Jobless Claims and Existing Home Sales highlight Thursday’s econ calendar. The latter comes 30 minutes after the open. The quarterly earnings onslaught also continues. If the reaction to Wednesday’s ineffectual optimism doesn’t immediately drop under its 1275’00-1276’00 lows, sellers probably still won’t influence Thursday’s session. That might even allow one more surge, perhaps up to 1303’00. But no follow-through from Wednesday’s unstable base should be lasting.[/pay]