Trading Plan for 8/15

Housekeeping!… Don’t forget to join us for Saturday’s Strategy Session at 9:15am ET. Its link can be found in the blog’s sidebar… Also, for chartroom subscribers, be sure that you are logging in from the sidebar in case of any change to its link.[pay]

Pattern points… (Setups and technicals)
Friday’s 18-1/2 point intraday range was very narrow, relatively speaking in this recent environment of volatility. It was also “ineffectual optimism.” Friday’s buyers were weak-handed, and they didn’t gain traction for their efforts.

It was optimistic – as much as possible – by gapping up, probing prior highs, probing the morning’s high, and trading exclusively in positive territory. It was ineffectual by closing back under the morning’s high and under the prior high.

Ineffectual optimism doesn’t prevent extending higher. Like the setup left at Thursday’s close after its buyers failed to gain traction, gapping up above the right resistance could extend higher. On Friday this resistance was 1282.00, just 14 points above Thursday’s close.

Now there is an added degree of difficulty after testing 1182.00 Friday – it is 1199.00. Just 22-23 points above Friday’s close. Should be simple enough – seriously, if a corrective bounce intends to extend higher Tuesday. A firm open Monday could still trend up intraday to test 1199.00, but it would be likelier to push back. Hard.

Otherwise, the past week’s action is resembling more of a bearish Flag pattern, and not so much basing that might launch a bigger rally. Last Monday night’s 1077.00 “new Globex trend extreme” need not be retested immediately, and probably should not be if the lows intend to hold.

What’s Next… (Outlook and opportunities)
A weekend of opportunity to grab headlines might be unusually quiet, according to Friday’s narrow range. But that won’t preclude volatility on Monday. And trying initially to trend sharply in either direction without some new development – whether as a relief rally, or as another sell-off attempt – should find its sponsorship is thin, and refueling a much more substantial move in the opposite direction.[/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.