Trading Plan for 10/7

If Monday”s sell-off were resuming the decline … then it should have been more productive than just retracing Friday afternoon”s range. Especially after the noon hour managed to probe deep into Friday morning”s range. But not immediately rallying Tuesday would give the decline a benefit of the doubt for resuming… P.S. Click here for Monday”s post-close Market Wrap recording.

Pattern points… (Setups and technicals)
Monday”s open fulfilled the absolute minimum requirements left over from Friday”s session. Not that there weren”t several obligations, or that some weren”t neutralized. Everything that Friday”s session had forecast for Monday”s open was fulfilled, but only barely. 

Gapping up, probing higher, fulfilling the afternoon”s 1967.00 bias-up target… The reversal down could barely wait for those upside characteristics to have developed. Buyers never gained traction through any of it, so no unfinished business was left outstanding above — not even the barest of attractions.

No unfinished business was left outstanding below, either. RSIs diverged positively on the noon hour”s 1950.50 low. A short-squeeze setup coming out of the bias environment 4 points above the noon hour”s 1958.00 high wasn”t confirmed going into the final hour. An uptrending pivotal support narrowly avoided breaking lower at the close.

Actually, the uptrending support is being probed post-close. That”s not a relevant timing window, but not recovering it overnight would be bearish. Otherwise, Monday seems to have been about buyers expending minimum work to give up minimum ground.

What”s Next… (Outlook and opportunities)
Although the stock market remains open next Monday, there is potential for seasonally bullish influences going into the weekend. So, if a decline or another downleg intends to be productive this week, it will probably have to extend down Tuesday. Beginning any later could be too late.