Trading Plan for 8/3
It’s two, two, two objectives in one… The decline’s next major objective was 1251.00. It was to be put into play upon closing under 1276.00. Interestingly, there was never a close under 1276.00 to put into play 1251.00. Monday avoided closing under it by one timing window, and not a very convincing one at that. But Tuesday compensated for the delay, closing under both 1276.00 and 1251.00.[pay]
Pattern points… (Setups and technicals)
Tuesday’s 1250.00 cash session close was still in the process of testing 1251.00, so its sellers did not officially gain new traction. Regardless, no higher prior low was recovered to rob sellers of the traction that produced 1251.00‘s test. That is not a buy signal, although it could launch a corrective bounce.
Of greater, growing concern is my “crash” template that is tracking. It allows 10 consecutive declining sessions, with 1-2 exceptions counter-trend (there need not be 2, they must be non-consecutive, and they may not close above a prior close). Then, either the pattern snaps back up sharply, or else breaks sharply lower.
Usually it snaps back up, especially when the count coincides with a test of prior lows. June’s 1252.25 prior low is being tested now, but only on day 7 of the sequence. A counter-trend bounce on Wednesday could expend buying pressure at a level where resuming the count would break under prior lows.
We recorded the post-close Market Wrap. It may be viewed by clicking here.
What’s Next… (Outlook and opportunities)
A lot of selling pressure has been expended already. A major objective is being tested as support. And even the bearish scenario’s “crash” setup is overdue for a counter-trend session. None of which requires a bounce, but each of which increases the vulnerability to a bounce.
S&Ps have extended down already to at least 1244.25 after Tuesday’s close, a “new Globex trend extreme.” Recovering enough overnight to gap up Wednesday would leave the unfinished business below outstanding to attract price back down after the counter-trend session. Otherwise, ranging widely around 1251.00 Wednesday may only refuel sellers, too. [/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.