Trading Plan for 7/25
I had noted Monday afternoon… that the eventual retest of its low would compensate for the delay. That compensation could have been less had it happened intraday. It didn’t happen until Tuesday, so the compensation — and the delayed drop — was greater.
Pattern points… (Setups and technicals)
Like Monday afternoon, Tuesday’s signals did not reflect strong-handed buyers. Oversold RSIs at the afternoon’s 1323.75 low produced a bounce during the last half-hour up to 1335.00, but it was still doomed to failure — the oversold RSIs require a retest, probably down to 1321.25. But that bounce did have one potentially bullish accomplishment.
More on that in a moment…
Reaction to AAPL’s miss triggered a plunge down to 1321.25.
Okay, now more about the potentially bullish accomplishment of Tuesday’s close.
The required retest of Monday morning’s 1332.00 low had targeted 1330.50, and possibly 1328.25. As this test was delayed into yet another timing window, there became room down to 1327.50. After testing them all (down to 1323.75) the cash session closed back above them at 1333.50.
In other words, a big cluster of targets held through the close. Day-to-day sellers gained no traction for their effort. This doesn’t preclude probing fresh lows, nor does it preclude fresh lows from gaining traction — but fresh lows would find more difficulty gaining traction.
Similarly, intraday buyers gained no traction for their late-afternoon effort. They may already have suffered the consequence by reacting down on AAPL’s earning. The next lower target was 1321.25, and the reaction to AAPL just touched it. If this isn’t a meaningful low, then the downleg from Thursday’s high is about to extend by a multiple.
What’s Next… (Outlook and opportunities)
In the Market Wrap I noted that since Tuesday’s late buyers did not gain traction, extending its last-minute bounce Wednesday would require gapping up sufficiently. That, or recovering from fresh lows, preferably after fulfilling the next lower target (like 1321.25), which could be done overnight. Lower lows could test 1318.00 and then 1314.00. A gap up must recover 1342.50 to be credible for extending higher
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.