Trading Plan for 7/7

Getting to the top… and then holding it can be harder than exceeding it. Wednesday did neither, reacting down sharply from its overnight test of the 1339.00-1340.00 objective. [pay]

Pattern points… (Setups and technicals)
An overnight surge had probed prior highs and the 1339.00-1340.00 objective up to 1340.75. It was retraced down to 1328.25 – before the open. The retracement extended down to 1326.50 after the open.

That’s a lot of selling pressure. A lot of weak-handed selling pressure, considering that it was unproductive.

The range’s lower-end held its test before the open, and the 1329.50 bias-down signal held (barely) through the open. Trending was not signaled (it wasn’t prohibited, just not predicted). In the absence of trending, there is ranging. And exiting the open at the range’s lower-end makes a test of the upper-end likely.

That’s what the balance of the morning tried to do, recovering up to 1336.75 at the noon hour’s end. No distributive pattern had developed during a pullback to 1332.00. Closing above 1334.50 allowed holding long through the close.

Fresh highs didn’t print until after the close (right after the close). The post-close surge up to 1338.75 resembles Tuesday’s late action. That didn’t prevent reversing down overnight into Wednesday’s open, but it helped to absorb the reversal. Reversing down overnight into Thursday’s open is unlikely, and unlikely to be absorbed.

What’s Next… (Outlook and opportunities)
Wednesday’s 1340.75 pre-open high is a “new Globex trend extreme” that requires intraday retest. Intraday highs since Friday have held tests of 1336.50. Opening Thursday between them – or just under 1336.50 – would still be likely to test 1340.75 intraday. Opening weakness could be absorbed down to the 1331.00 area, but any lower would simply point down. [/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.