Trading Plan for 8/6

Did it, or… didn’t it? New high closes on Fridays all but ensure trending further. Friday’s futures close was certainly a new high, but does it ensure trending any higher?

Pattern points… (Setups and technicals)[pay]
Friday’s late dip under 1387.25 triggered a sell signal that would have been very productive if triggered one hour earlier. And exiting a bias environment under 1385.00 would have signaled a much bigger break lower underway. Break too late under 1387.25 only tested 1385.00. The cash session closed at 1387.25.

1387.25 was last Monday’s prior high. Even then the late break lower touched the prior Friday afternoon’s 1384.75 high as support. It was too late for any closing bounce not to be interpreted as still testing prior highs.

Extending higher would next target 1406.00-1407.00, and potentially 1428.00. Any new highs — even that much higher — could still reverse down sharply. Another refueling dip from this area is unlikely, since that was the purpose of this week’s pullback. Speaking of which, the most recent new attraction below is Thursday’s oversold RSIs at 1350.00 low.

Fresh highs could be probed Sunday night and rejected without requiring a retest intraday Monday. Regardless, another pullback has to 1370.00 before suggesting a reversal down was delayed by the Friday afternoon’s thin participation.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget about the Saturday Strategy Session, linked from the blog’s sidebar. We’ll discuss the bigger picture — like the paths higher or lower, the oddity of two consecutive “moments of truth” — and offer instant analysis of your stock requests. [/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.