Trading Plan for 10/4
If the point to this week’s early rallies has been to absorb selling… then buyers had better be rewarded soon. Someone has been absorbing someone, but sellers will get the upper-hand if buyers can’t exploit the situation.
Pattern points… (Setups and technicals)[pay]
Another day, another overnight rally, and another higher open greeted by relentless selling pressure. Positive territory ultimately holds, producing another overnight rally. That has been the pattern all week. Monday, Tuesday, and now twice on Wednesday. Yes, twice.
Wednesday’s higher open at the 1443.00 bias-up signal wasted little time before sliding to the 1436.00 bias-down signal. What had taken five hours Tuesday, took a half-hour Wednesday. What to do with all that extra time? Another “overnight” rally! The close was almost an entire session away, but that didn’t prevent a 13-point rally up to almost 1449.00.
That was just into the noon hour. Another “overnight” rally had created a lot of extra room to absorb selling pressure. It was a premature no-bias rally, anyway. So, that extra room was used once again by more relentless selling, back down to 1441.00 — essentially Tuesday’s high, avoiding negative territory.
Is the next overnight rally may already be underway? Wednesday’s last reaction was a 5-point bounce up to 1446.00 might seem bullish, but that held a 61.8% retracement of the afternoon’s decline. Extending any higher at Thursday’s open should extend much higher. But probing under Wednesday afternoon’s low could put last week’s lows back into play.
[/pay]What’s Next… (Outlook and opportunities)[pay]
If the theme is intact, that buyers deserve a reward for three days of absorbing intraday selling, then simply probing fresh highs for the week will not suffice. An attack on the 1468.00 prior high would be possible. But three days of offering support to absorb sellers had better be rewarded soon, or else that support will be chipped away. [/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.