Trading Plan for 10/1

If Friday afternoon’s bounce didn’t reverse the morning’s drop… then, did it refuel the week’s decline? Suspicious behavior undermined confidence in the intraday recovery attempt. The recovery’s collapse confirmed suspicions. But avoiding fresh lows left us with only those suspicions.

Pattern points… (Setups and technicals)[pay]
The thing about trending on Friday morning is that it has a significant advantage. Two days of illiquidity is fast-approaching, limiting any counter-trend effort. That’s not to say Friday morning trending always extends — it can get ahead of itself and become vulnerable to retracing. But Friday morning trending gets a benefit of the doubt.

Reversing it tends to be preceded by a very specific behavior: exiting a relevant timing window back above a prior high in a downtrend, or back under a prior low in an uptrend. Any lesser or later reversal attempt is probably sponsored by weak hands.

Friday morning’s drop could have reversed up by recovering 1436.00 through a relevant timing window — exiting the morning’s bias environment, the noon hour, or the afternoon’s bias environment. Each probed above 1436.00 to late to be strong hands. The first two probes were productive. All failed.

Buyers had multiple opportunities to force shorts to cover, and to leverage that into an afternoon rally. Like Thursday’s failed late rally, they tried and failed. Like Thursday’s failed late rally, the consequences are bearish. Any rally Monday must be immediate.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join me at 9:30am ET for the Saturday Strategy Session. Its link is found in the blog’s sidebar, or just click here.[/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.