Trading Plan for 8/4
Did the crash template get its up-day? After 7-8 consecutive down-days, S&Ps finally closed positive. Another up-day might invalidate the setup. Meanwhile, we’ll keep monitoring for the potential snap back, or the break down.[pay]
Pattern points… (Setups and technicals)
Wednesday’s session followed the Pivot Reversal form. But it fell short in some aspects. The open’s 1251.75 print was definitely a gap up above both Tuesday’s 1250.25 cash session close and its 1247.75 futures close. But the open never tried to extend higher, so its reversal down into negative territory did not reject much buying. Nevertheless, Wednesday’s close did probe fresh session highs.
Session highs were another aspect that was lacking. While the pre-open high was eventually probed, June’s “higher prior lows” were being tested as resistance, neutralizing its resistance. Stopping short of touching them would have been more bullish, leaving their attraction active. Thursday’s open would have to gap up 35 points, above 1287.00, to gain traction.
And that’s if the bounce were even to resume Thursday morning.
Oversold RSIs at Wednesday’s 1230.25 low require an intraday retest. That situation could have been created only by strong hands. So, any bounce underway is sponsored by weak hands, and is only a correction, potentially limited to tests of 1264.00, 1268.00 or 1273.00.
A pullback has room down to 1245.00 before the bounce loses its momentum. And under 1239.00 would signal a retest underway of Wednesday’s 1230.25 low. Just closing under 1239.00 would renew the decline’s momentum, next targeting 1215.50, 1192.00 and 1168.00.
What’s Next… (Outlook and opportunities)
Wednesday afternoon’s bounce may try to extend higher overnight. The crash template will be concerned only with the close, which should be negative. Probing fresh highs is possible, to whatever degree or for whatever duration. [/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.