Trading Plan for 7/30

If Monday’s dip 61.8% retracement of Friday’s recovery is retested… then Friday morning’s drop will likely extend down sharply into Wednesday’s FOMC statement. Delaying another recovery attempt would not be bullish.

Pattern points… (Setups and technicals)[pay]
Monday’s most interesting similarity to Friday was that both were spent exclusively in negative territory. Just touching Thursday’s late 1686.25 high during Monday’s opening surge prevented defending against a 10-point drop to 1676.50.

Both negative sessions did close above their noon hour highs. But Friday’s last 60-90 minutes trended straight up, where Monday traded flat-to-lower. Neither session triggered a hold-long, despite last-minute surges.

At least Monday’s session had an opportunity to reverse back down into the close. A sell signal under 1681.00 didn’t trigger until the position-squaring window was lapsing. Its sponsorship was immediately productive down to 1679.50, but that was retraced entirely back up to 1681.00, and then 2 points higher to 1683.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
An overnight repeat of Monday’s late dip to 1679.50 could extend much lower overnight. A new downleg would be triggered back under 1672.50. Opening through or above Thursday and Monday’s 1686.25 high could leave the recent ranging behind, if only for a temporary probe of new highs. [/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.