Trading Plan for 8/11
[pay]Pattern notes.
When Friday’s drop to ESu 1262’00 recovered back above 1267’00, a massive short-covering rally reached new relative highs at 1298’00. Tuesday’s massive rally triggered above 1260’00 was similar, and Friday can also be characterized by it lack of selling pressure. Shallow consolidations, steep breakouts and significant gains. And a relentless session-long rally. The following chart highlights another similarity, each day’s 35-point gain from where the last sell-off ended.
Not shown are the comparable measurements between morning and afternoon legs. These and other similarities reveal the same lopsided optimism. That’s what delayed Wednesday’s follow-through, which did poorly upon meeting resistance. Another slow-start Monday is unlikely. Either the follow-through was incorporated already into Friday’s close at 1295’00 resistance, or an opening surge will test resistance at 11303’00-1306’00.
Indicators and Internals.
Friday and Tuesday’s internal spreads were also similar, in that each was evenly balanced – the spread between up and down volume equaled that between advancing and declining issues. That is, until the final 45 minutes. Then Friday’s up volume expanded its lead significantly. This internal jockeying wasn’t matched by price action, which ranged sideways.
Monday’s opening setup.
Falling Crude Oil helped a lot last week. Losses extended further intraday Friday, suggesting that the Georgia/Russia conflict might not impact any pipelines. It did over the weekend, and we’ll see how that plays Sunday night. Ironically, some of Crude Oil’s drop was thanks to the $USD flight-to-safety, which hit some key support/targets at Friday’s low.
If S&Ps aren’t influenced negatively by the foregoing risks, then a surge or gap higher would target 1306’00, where any higher would be very bullish so long as 1303’00 held as support. Otherwise, the paths for initial weakness are etched into the earlier chart’s price axis. Under 1287’00 would target 1275-’00-1276’00 and then back up into the 1300‘s, or else sharply lower to possibly resume the bear market.
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