Trading Plan for 10/10

[pay]Pattern notes.
Really after awhile it just feels like kicking the market when it is down. Another lower low, and another template for extending further. Every day either leaves unfinished business below to attract prices down, or confirms the decline remains intact. But this time it’s much more serious.

The nearby chart compares S&P cash for four weeks into Thursday’s low. The chart below it depicts the same time frame leading to 1987’s Black Monday. This is my crash template, formed from 8 of 10 declining sessions. That string of success stretches the rubber band thinly. Either it snaps back from being stretched as far as possible, or it simply snaps from being stretched further.

The last day in this template is today, Friday, which doesn’t appear in the 2008 chart. And not depicted in the 1987 chart is Black Monday. The current decline doesn’t have to stay on this path Friday. If it does, then it need not stay on this path Monday. But it would be quite a risk to hold anything long over the weekend.

Indicators and Internals.
A 17-point drop from 891’00 attacked overnight lows while 3-minute RSI diverged positively. Presently the drop has recovered, leaving no outstanding RSI signals.

Friday’s opportunities.
Thursday’s last blog post warned that a break under 955’00 would target 911’00 or even 876’00. The first target defined Thursday’s low, and now the second target is defining overnight lows. It was met well before midnight, and a 20-point bounce has been retraced entirely back to the target, which is holding again. If Friday’s open is under this low, then a session-long slide would be likely.[/pay]