Trading Plan for 7/27

Wednesday night’s rally did not… extend much higher intraday. Only high enough to fulfill the buying pressure that produced it, and to neutralize the attractions above. The next move won’t end so quickly.

Pattern points… (Setups and technicals)[pay]
Thursday’s close continued this week’s tradition of last half-hour rallies sponsored by weak hands. This one was attracted higher by unfinished business above at the afternoon’s 1357.25 bias-up target. It was tested up to 1358.75.

The 1355.00 close was back under the morning’s 1357.00 high, proving that its earlier probe was sponsored by weak hands. Not only did 1357.25 react down, but so did the test of “higher prior lows” probing back into last Friday afternoon’s range.

The rally off of this week’s lows was always expected to be only a correction before resuming the decline. Its potential objectives for a correction have been fulfilled, but not exceeded through the close. Friday morning’s initial trending normally should persist through the noon hour. This one could persist through Tuesday’s open.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday’s late weak-handed test of the bounce’s target can be reversed without new sponsorship for a decline. But it can be extended only with new sponsorship for a rally. Any less strength than gapping up strongly Friday would be likely to resolve down, and probably already falling quickly before the 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.