Trading Plan for 7/30

If I’ve said it once… then I’ve said it a thousand times. Friday trending is nearly impossible to reverse. It doesn’t always extend, and it can often retrace. Friday is a Newtonian object in motion. An equal and opposing force would still trigger a reversal, but Friday reversals all but require an opposing force.

Pattern points… (Setups and technicals)[pay]
And Friday’s rally met no opposing force. In fact, just as an inflection point at 1372.25 was ready to at least contain the rally’s momentum, a headline accelerated momentum upward. That’s the opposite of an equal and opposing force.

The headline’s knee-jerk reaction surged up to 1384.25. The surge developed exclusively during a single timing window, and its later retest up to 1385.00 was only noise. Reacting down to 1379.50 confirmed the retest had held, and closing under 1382.25 suggested the current sponsorship was fulfilled.

Closing under 1378.50 would have been a compelling hold-short setup. Closing above it doesn’t preclude gapping down significantly Monday anyway. A probe of fresh highs could be bearish only if rejected aggressively. That’s too late for an intraday setup, so triggering a two-day reversal setup Monday may be the only way to prevent extending next to much higher highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join us for the Saturday Strategy Session where I’ll describe that bearish setup’s parameters, its potential limitation down to 1363.50, and the alternative path higher to 1406.50-1407.25. It begins at 9:30am ET, and you’re welcome to request instant-analysis of your own stock picks.[/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.