Trading Plan for 8/10

Are you ready to… rally? The market at least seems unwilling to trend down. The reaction down from Wednesday night’s fresh highs — like Tuesday night’s reaction down — was largely recovered Thursday. That’s not in itself bullish, but recent pessimism has proved not to be bearish. And the weekend’s illiquidity is fast-approaching.

Pattern points… (Setups and technicals)[pay]
Thursday afternoon’s ranging never signaled that sellers were gaining traction. The bias environment’s exit was probing the noon hour’s high, and the final hour was probing the bias environment’s high. No buy signal exploited the setup, and the position-squaring window’s test of support held.

Much less selling pressure was expended Thursday afternoon than during the drop from Tuesday afternoon or Wednesday night’s highs. But only Thursday afternoon’s selling pressure has yet to follow the pattern and recover.

Once again, sellers must be in obvious control immediately Friday to be credible at any other time intraday. Gapping down or sliding sharply through the open would get every benefit of the doubt for extending down. This being a Friday, the morning’s bias is likely to persist through the noon hour.

This being a Friday, with so much unproductive selling during the past several days, not trending down immediately would be vulnerable to rallying into the weekend.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday morning’s 1402.75 high already retraced 61.8% into the overnight Double Top. It serves by proxy as already having retested that high, leaving no reason to probe any higher — no bullish reason. So, lmost any fresh high above it would be bullish for at least 1406.00-1407.00. Breaking under Thursday’s lows would put the highs behind us.[/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.