Trading Plan for 8/9

[pay]About that close (How the prior session ended)
Friday’s narrow extended ranging under 1108.50 suddenly broke higher from a dead stop. Persistently overbought 3-minute RSI kept the ground fertile for higher highs to probe 1118.00 by 2 points. Simultaneously overbought RSIs became negative divergences, but then the cash session’s close prevented sellers from retaking control.

Pattern points (And technical influences)
The “session-long decline” setup has several characteristics. There’s “decline,” which the morning certainly delivered. There’s also “session-long,” which the last hour stole. In those rare cases, the following session usually delivers on the setup, compensating for the delay.

Meanwhile, another characteristic of the session-long decline is trending into the close. The setup may have inverted, trending up 10-11 points to 1119.00-1120.00 instead of down 10-11 points to 1098.00-1100.00. Its influence would be fulfilled and neutralized without letting sellers gain traction.

Resolving a setup by inverting its direction is rarer than delaying its resolution. We’ll look for signs of either throughout Monday morning. Extending above 1121.75 would at least retest Thursday’s 1127.75 high. Back under 1114.50 would start to unwind Friday’s late surge. Resuming the decline would then become likelier.

Bottom line (My underlying premise)
Signs of ineffectual optimism were rampant throughout last week’s ranging. They continued Friday, from the gap down’s initial reaction up, to the session low holding above lower prior highs and nearby gaps. The closing surge was kind of optimistic, too, but not necessarily “ineffectual,” not yet. [/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.