Trading Plan for 10/24

If Tuesday’s low fulfilled the decline’s objective… then Wednesday should not delay proving that a recovery is underway. But there are a couple of issues with Tuesday’s low being a bottom, like meeting it in a single leg instead of on a retest. So, either sellers or buyers that take immediate control Wednesday will get a benefit of the doubt for extending in that direction.

Pattern points… (Setups and technicals)[pay]
A test of the 1400.00 area has been the longstanding objective of this decline. At least, for the purpose of launching a retest of 1468.00. Tuesday’s low was 1402.00. So, what’s the problem?

Corrections tend to end on a retest, and not in exhaustion. A meaningful bounce from 1405.50 to 1414.50 was likely to intercede between a probe under 1400.00. While 1405.00‘s test did produce a bounce up to 1414.50, what about the lower low?

Tuesday’s “session-long decline” setup did prevent the intraday recovery from actually recovering — the gap down’s 1412.50 opening print held multiple tests throughout the afternoon. Only its likelihood for printing session lows during the last hour was left outstanding. Either the signal is fulfilled and because tremendous buying pressure is forming, or it will be fulfilled almost immediately Wednesday by probing under Tuesday’s lows.

If it’s the latter, then a fresh low Wednesday had better hold, or else a much much bigger decline is underway. If Tuesday’s recovery were to extend higher, then it’s opening will determine its trustworthiness.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday’s open may be influenced by pre-open econ reports. But its post-open action should be inhibited ahead of the afternoon’s FOMC announcement. [/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.