Epilogue 7/12/2021

Yesterday, our S&P 500 index market proxy started with a weak bull trend from the open on weak internals. The initial, bull microchannel price action ended on a parabolic wedge that stalled at double the 30-min range, and eventually broke to a new, all-time high in the afternoon drive from an ascending triangle consolidation. 

There were a couple of buys near the open and a classic, initial 30-min opening range buy after the first half-hour that topped at double the opening balance range. From there, you could have taken a number of trades off the 21-EMA line, selling either at the triangle top or at the Keltner Bands or Bollinger Bands.

Often, when the market is trending on weak internals, a good target is double the initial 30-min range, as we saw on this day. The market remains strongly bullish on the daily, weekly, and monthly charts, and the downside likely is limited for at least the rest of the week.

The probabilities are that July will close below the open of the month since we have six consecutive monthly bull market candles on the chart. It is highly unusual to have that many uninterrupted, positive months. 

With July likely to close below the open of the month and after the 11-day microchannel (buy climax) ended last week, the probabilities are that there is  limited index upside for the remainder of the month – and the better focus is likely on stocks and sectors that are still rising. Since there is not a strong likelihood of significant gains or losses

In the near term, traders should expect the bull trend to evolve into a trading range. There were a number of good “scalping” trades throughout the day, as illustrated on the chart above.

A.F. Thornton