Trading Plan for 8/16

Monday’s gap up extended higher… and probed higher. Too bad the day ended while testing its target. Exceeding or rejecting it would have triggered a clear path up or down. But ending the day while testing its target delays the next leg’s signal. [pay]

Pattern points… (Setups and technicals)
Extending the rally Monday would have had potential up to 1199.00. The target was met during Monday’s last hour. It was probed up to 1200.00 and to 1201.75. Each interim retracement dipped under 1199.00.

A post-close dip fell to 1194.75. Between the attraction and reactions, clearly 1199.00 proved its relevance. Its recovery would put into play the next higher objective(s). How’s that going?

Unfortunately for the recovery, Monday’s last hour was not entered above prior highs. And RSIs diverged negatively. Monday’s close was essentially equilibrium, i.e. closing AT at target, instead of exceeding it, or rejecting its test.

1199.00 may still be the bounce’s high. But due to closing Monday while still testing it, we won’t know that answer until Tuesday’s noon hour, or if Monday’s open were to gap sufficiently.

What’s Next… (Outlook and opportunities)
Gapping open above Monday’s 1201.75 high or under the 1190.50 last relative low would be likely to trend in that direction. Trending up would have potential to 1226.00-1230.00, to 1242.00 or even to 1269.00. Trending down could hold 1180.00, but almost any lower would find a big air pocket below. (I was away from the market after 3:45 Monday, so there was no Market Wrap)[/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.