S&P 500 trading plan for today

If the S&P 500 (CME:SPU14) holiday high’s retest is forming a top… then its rejection should be obvious by Thursday afternoon. So should the opposite.

Pattern points (Setups and technicals)

Did the impending post-close Facebook (FB) earnings inhibit Wednesday afternoon from ranging? The likelihood of July 3’s retest also visiting 1982.00 was fulfilled in the morning. Its noon hour reaction was largely retraced during the bias environment. But then a narrow 1981.00-1982.50 range strangled price action through the close.

None of which is either bullish or bearish. But some of it is predictive. For example, we do know that 1982.00 is influential — more as a magnet than as a repellant or accelerator, but influential, nonetheless. Immediately trending down would be likely to recover to fresh highs, even if only to touch 1984.75. Similarly, testing 1984.75 and THEN trending down would be credible for extending.

That is juxtaposed by another predictive example. Wednesday’s last three or even four timing windows overlapped each other at relevant time points (e.g. the bias environment’s exit, the final hour’s entry). So, unless trending is established at Thursday’s open, its entire morning will be vulnerable to resuming a relatively narrow directionless range. This is regardless of gapping up or down — in fact, the two days tend to be interrupted by a gap. Trending through the open would break this grip.

What’s Next? (Outlook and opportunities)

Regardless of these influences an others, the pattern remains vulnerable to extending higher. The only sell signal is a break back under a prior low, which even Wednesday’s noon hour drop avoided.


Ed Note: Every day traders can listen to live, streaming squawk box commentary on FUTURESmag.com coming directly from the S&P trading pits in Chicago.

About the Author
Rod David

Rod David develops analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He primarily analyzes S&Ps, generating several round-turn candidates daily. Rod publishes "Trading Plan" and more each session at the blog http://IfThenSignals.com.

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