Trading Plan for 7/9

If the pullback intended to launch a durable recovery… then why aren’t buyers gaining any traction from the closing bounces? Even if Wednesday’s open were to gap up, it would leave a gap back to Tuesday’s close wanting to be filled.

Pattern points… (Setups and technicals)[pay]
Monday afternoon’s low printed just inside of the last 60-90 minutes, and just outside of its bias environment. So, gapping down under it Tuesday, after having trended up into Monday’s close, might have qualified as a “session long decline.” And it might not.

Every timing window Tuesday but one should have printed a fresh session low. The afternoon bias environment did not, but neither did its last 60-90 minutes. Often that delay is compensated by trending lower the next day — not piercing or probing, and not necessarily by gapping down.

Closing at 1958.50 Tuesday is similar to closing at 1971.25 Monday, expending all available buying pressure without gaining traction for the effort. Gapping up Wednesday above the 1965.50 area could kick-start buyers. Anything more shallow is likely to extend the decline.

Closing back above 1958.50-1961.75 could launch a new upleg — trending higher, and not just retesting last week’s high. Closing under Tuesday’s ~1953.25 low would signal a much more substantial downleg underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Did fear of Tuesday afternoon’s Fed speakers keep the session under pressure? Then lookout for Wednesday’s FOMC Minutes, which should have a bearish impact, if not discounted sufficiently ahead of the release. [/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.