Trading Plan for 7/29

[pay]About that close (How the prior session ended)
Wednesday afternoon’s last stabs at recovering 1108.50 were either too early or stopped short. A dive into the session’s last hour reached 1099.25. RSIs diverged positively to launch a bounce. But not until after the 3:10-3:20 window indicated that sellers had gained traction.

Pattern points (And technical influences)
The late bounce peaked upon testing the morning’s 1103.50 “higher prior low” as resistance. Closing under the morning’s low on a negative session means sellers gained traction.

The 3:10-3:20 window did not recover a prior high. Nor did it recover from probing a fresh low. It remained under the most recent prior low. This doesn’t signal the next immediate direction, but it does confirm the current direction will prevail. In case of a bounce, its purpose would be to refuel sellers. In any event, Wednesday’s 1099.25 lows should be probed.

A shallow probe under Wednesday’s 1099.25 lows could bottom at 1097.00-1098.00. The alternative would target 1089.00-1090.00. Recovering 1107.00 (whether or not by gapping up above it) would insert a detour targeting a retest of Tuesday’s highs around 1118.00. But its purpose would still be to refuel sellers.

Bottom line (My underlying premise)
Thursday’s relatively quiet news day begins with a high-profile econ report. Its worst-case could only confirm other reports that have dribbled out this week. A miss would have to be so wide that it might be considered an outlier. A near-term trading low at Thursday’s open is possible. No trading low at Thursday’s bottom would suggest that market participants were coming to realize that the 1108.50-1118.00 area was a significant top. [/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.