Trading Plan for 10/7

Pavlov’s dogs weren’t fully conditioned… not on the way down. We’ll soon see whether two consecutive uptrending sessions are sufficient to bring out early buyers — without having to feed them.

Pattern points… (Setups and technicals)[pay]
Thursday’s pre-open probes above 1143.50 were corrected by the morning’s dip to its 1129.50 target. A rally entered the noon hour probing fresh highs, and barely looked back intraday on the way to 1160.50.

Its final surge was yet another last half-hour oddity, suggesting the same sponsorship since Tuesday’s low. Greeting Friday’s Employment Situation report from above 1154.25 was likely to absorb any initial negative knee-jerk reaction. The timing of the final surge that actually did recover 1154.25 does undermine its credibility.

Regardless, a decline probably has one opportunity — maybe two — to gain traction.

One bearish option is to gap down under the afternoon’s 1145.50 low, which would trigger a “session-long decline” since Thursday’s close trended up. The other bearish option is to reverse down from probing fresh highs, preferably after dipping under 1154.25. Otherwise, sellers could be marginalized for the day.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget about the Saturday Strategy Session at 9:30am ET. Saturday. [/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.