Trading Plan for 10/20

[pay]Pattern notes.
Friday’s close at ESz 933’25 barely managed to close back under the 955’00 overnight high. Barely? 22 points? Actually, the last 60-80 minutes ranged 15 points either way of 955’00. The lower-end of this late range started giving way and the slide steepened into and out of the cash session close.

The range’s lower-end was also chipping away at support offered by Thursday’s 940’00 close. Not coincidentally, the morning’s breakout reacted back down to this same level before surging up to 987’75. It’s an important area, and closing under it was also important. It is similar in principle to the top that was sealed Tuesday morning. Coincidentally, Friday’s high was a 61.8% retracement back to Tuesday’s high, a healthy correction.

Monday’s open could still gap up above 940’00-945’00 to reject Friday’s last-minute downleg – I would give these buyers a benefit of the doubt, but not a very long lifespan. Otherwise, Friday afternoon’s drop is likely to bleed into Sunday night’s open, and Monday’s open could gap down under 911’00.

Indicators and Internals.
There was no unfinished business with MACD & RSI. The opening and closing 15 minute windows trended away from each other, so the Friday Factor offers no clue. More interesting than either of those factors could have been, is that the internal spreads diverged negatively; more NYSE up volume than down volume produced more declining issues than advancers.

Friday’s opportunities.
The last available relative low is Friday’s opening at 918’00. Gapping under it would set a negative tone for the morning, and probably for the day. Recent lows at 837’00 still require a retest by more than a few points. The path down is so clear, so I would buy eagerly if Monday’s open were gapping up enough, since something very bullish would be needed to point higher first at this stage of the pattern.[/pay]