Trading Plan for 10/17

If Wednesday were a session-long rally… then Thursday morning should produce fresh highs. Just remaining aloft after Wednesday’s opening surge isn’t optimal for the setup. But the burden of proof is much more on sellers until late Thursday morning.

Pattern points… (Setups and technicals)[pay]
Wednesday’s new high close is not a breakout. It reversed only one declining session in recovering to new highs. So, closing higher Thursday wouldn’t be a confirmation, and wouldn’t require a third higher close. In other words, Wednesday’s attempt to resume the rally is vulnerable to peaking and reversing down at any moment. It is the definition of “living on borrowed time.”

That vulnerable rally is still capable of extending higher. But it requires new sponsorship. Wednesday’s buyers were already satisfied. Multiple consecutive timing windows overlapped the same range — that is the opposite of trending. Neither buyers nor sellers gained traction for their efforts.

Meanwhile, it was premature to resume the rally Wednesday. This also suggests the rally attempt is living on borrowed time. It also suggests there is a greater vulnerability to reversing down much sooner rather than later. Extending any higher intraday would likely target 1724.00. Back under 1702.00 would start to seal a top.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The debt deal seems to be on auto-pilot at this point going forward. A negative headline would be even less credible now, than during the past week. I wouldn’t buy weakness that hasn’t already begun recovering. And I would become a seller if any support were broken through a relevant timing window.[/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.