July 18 Bounce Level Planning and Intraday Update

Jul 18, 2014: 12:46 PM CST

It’s as if yesterday never happened – buyers intervened and tripped the market higher as bears covered losses during the rally.

Let’s put today’s price action in the context of the broader trading range (highlighted in yesterday morning’s update post on the S&P 500 and Dow Jones rising trendline levels to watch) and note which levels are important for trade planning now.

After a false breakdown (Bear Trap) under the 1,960 level, buyers intervened at the 1,955 level which resulted in part in today’s bullish rally up off the trendline support in a stronger move than we saw from the July 10th intervention (similar scenario).

The index now interacts at the pattern midpoint near 1,971 which is our focal point for the remainder of the trading day.

Any further support-up off this level suggests 1,983 is back in play while a break under 1,970 opens a sell pathway again like July 10th.

Continue to compare today’s session to July 10th.

Sector Breadth sends NO SIGNAL to us at the moment:

We typically group our nine major sectors into Risk-ON and Risk-OFF groups but we see across-the-board bullish performance for all sectors except Energy.

Offensive and Defensive sectors are doing just as well today, which underscores the large amount of money coming back into the market (or losses being covered by the short-sellers).

Now, let’s shift our attention to bullish-trending stocks for potential buy-trades the rest of the day:

CME Group (CME), ICE Exchange (ICE), Hershey (HSY), and Gamestop (GME).

Bearish potential trend day continuity stocks include the following candidates:

Johnson Controls (JCI), General Electric (GE), Airgas Inc (ARG), and TransOcean (RIG).

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Corey Rosenbloom, CMT
Afraid to Trade.com

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