Trading Plan for 10/17

If the rally is extending higher… then Wednesday’s open will need to compensate for the delay of not having been signaled at Tuesday’s close.

Pattern points… (Setups and technicals)[pay]
Not all battles in the market are between strong hands and weak. More often, they are between weak hands and weaker. The trend may be up intraday, but it is a corrective bounce that will ultimately resolve down. An attempt to reverse the bounce might be stronger hands retaking control, or it might be weaker hands that believe wrongly the bounce already ended.

Tuesday afternoon’s drop-off was the latter, weaker-handed sellers attracted by the noon hour’s narrow ranging between 1448.75-1450.50. Their dip down to 1446.25 probed the bias environment’s lows after the final hour was already entered. That’s weak-handed sponsorship, and it failed.

Meanwhile, the rally’s sponsorship isn’t much stronger. It did bounce all the way back into the 1448.75-1450.50 range when the position-squaring window started. Waiting so long to probe back above 1448.50 was too late to signal higher targets in-play. A blip-up to fresh highs at 1451.50 after the cash session close was retraced back down to 1448.75, so no”hold-long” setup could be contemplated.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Just extending higher at Tuesday’s open already made Monday’s rally unlikely to end before Wednesday morning. So, initial selling pressure would suggest the rally was going to extend beyond Wednesday, to at least retest prior highs. The most bearish setup may be to trade only flat, until strong-handed sellers would be credible. [/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.