Trading Plan for 8/1

If Wednesday’s fresh session highs aren’t exceeded soon… then their failed test and retest is more than bearish. It’s potentially a turning point for the recent consolidation to produce a downleg before the weekend.

Pattern points… (Setups and technicals)[pay]
There was quite an opportunity to extend the rally to above recent highs — more so, when Wednesday’s final hour was entered probing fresh intraday highs. That setup tends not to reverse down, but reversing down tends to be very productive.

It reversed down. And it was productive. The 14-point drop from 1694.00 printed a fresh intraday low. Key resistance at 1682.00 wasn’t recovered until after the cash session close, which made a compelling hold-short setup. A bounce almost touched 1686.00 into the futures close.

The afternoon’s sudden reversal down did fulfill its setup, and the hold-short setup was fulfilled. The burden of proof is on buyers. Sellers get every benefit of the doubt.

Nevertheless, I will keep an open mind to them gaining traction if sellers aren’t obviously in control after Thursday’s open. Only testing prior intraday highs, and not their nearby overnight highs, seems a little too impatient and excessively pessimistic.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Econ reports are almost as frequent and high-profile Thursday as they were Wednesday. The morning’s resolution should be in-line with the recent range’s ultimate resolution. [/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.