Trading Plan for 10/1
If the shutdown countdown takes stocksdown Tuesday… then a durable bottom probably won’t print until Thursday. Magically reaching an unprecedented 11th hour agreement would easily gap up — and leave unfinished business below.
Pattern points… (Setups and technicals)[pay]
Hope might not spring eternal, but there’s always some time allotted to it intraday. Sunday night’s gap down was support until Monday’s open was near, and then it extended lower. That was very short-lived, and reacted up sharply. Similarly, Monday afternoon’s selling wasn’t very productive until the last timing window got underway. That was supported at the same levels that held Sunday night’s gap down.
The session gapped down, spent the entire day in negative territory, and retraced almost all of the midday rally. Yet, sellers aren’t necessarily strong hands, they’re just a little stronger than buyers. Example: The afternoon’s 1672.00 minimum target was fulfilled, but optimism prevented fulfilling the potential to 1670.50. Then that optimism produced a 7-point surge into the close. No buying pressure was left outstanding.
The open’s pessimism was quickly punished, and the afternoon’s optimism was quickly rewarded. Monday’s buyers gained no traction for their efforts, failing to recover 1678.00 (reaching 1675.75 pre-close, and 1679.50 post-close). So, rallying Tuesday will require hope to spring overnight for gapping up sharply, preferably above 1683.50. The trend otherwise remains down.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Take note of the resistance levels above if trading overnight, especially those that must be recovered through Tuesday’s open for extending higher. Testing them overnight wouldn’t necessarily be a sign of strength, and could instead refuel sellers. Although the same is true to some degree for probing fresh lows, any “new Globex trend extreme” would undermine a recovery.[/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.