Trading Plan for 10/10

If last Thursday”s low was so impressive… then why was it retested Wednesday? And why was it attacked this Thursday, despite substantial bounces in between? If this are intends to be a bottom, then where will it get more buyers ?

Pattern points… (Setups and technicals)
Thursday”s noon hour exit probed a fresh session low down to 1924.25, down about 37 points on the day. It took 1-minute and 3-minute RSIs oversold. The 1924.75 bias-down target was being tested. The oversold bounce”s reaction up reached 1935.75.

Why is the market still defending this area, and why is it defending it at all the wrong times?

Surely, some portion of selling pressure was accelerated from Friday”s planned exits trying to get out before the morning”s drop extended. Some portion was sellers that might not have sold but for the drop”s slope. That selling is done.

Usually, when those two groups of sellers apply extra pressure, the close will have recovered a relevant price to trap them. Thursday did not. Gapping up immediately Friday has 14-16 points before doing so by proxy, back above 1936.00-1938.00.

Blipping down to test 1910.00 could discover sellers are done already, and spend the rest of the morning attempting another intraday surge. Gapping down and staying down, or temporarily bouncing back to Thursday afternoon”s range, could still double the size of Thursday”s 40-point decline.

What”s Next… (Outlook and opportunities)
Watch out for the Friday Factor this wee, which normally sucks the afternoon of volatility. That”s because trending is difficult to start in a low volume environment, as is trending through a resistance or support. This Friday isn”t itself so light, but it precedes a typically light session — Monday”s Columbus Day holiday. Pre-holiday positioning may have been affected by Thursday”s slide.