Trading Plan for 8/8

If Thursday’s low is only temporary… then the next lower low is in an entirely different zip code. But that’s not going to be an issue if sellers aren’t in control of the open.

Pattern points… (Setups and technicals)[pay]
Two rallies had failed within 24 hours of each other. First was Wednesday’s morning-long 18-point surge to 1923.50. Then came the pre-open surge to fresh highs attacking 1926.00. Both Italy’s triple dip news and the Russia-Ukraine headline were retraced. But not reversed. And that let the market focus on the impending weekend.

Thursday’s sell-off fulfilled the third lower lower close that was required by last Thursday and Friday’s confirmed breakout. That setup doesn’t require lower lows, but neither does it preclude extending down. Meanwhile, the past several sessions have consolidated at the lows, but not trended down. Even Thursday’s day-long decline that probed new lows still ended the day fluctuating around the range’s lows.

The past week has formed a Falling Wedge-like pattern (depicted on the post-close Market Wrap recording) that was entered aggressively. It is usually then exited aggressively. The alternative is to react up bullishly. The impending weekend’s illiquidity either accelerated selling pressure so that its absence Friday would allow a rally, or else a capitulation is underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There is no Saturday Strategy Session this weekend. Also, the Market Wrap will begin early so it can end before the close. So, be sure to request any chart analyses intraday.[/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.