Trading Plan for 10/9

[pay]Pattern notes.
The mid-afternoon consolidation had every opportunity to break higher. The range was testing the morning’s high, and the morning’s high wasn’t offering much resistance of its own. But apparently the morning’s high was the morning’s high because of resistance offered there by something else.

Regardless, the pattern broke lower instead of higher, back towards the cash session lows. If the market wants to bottom soon for a more significant corrective bounce, then this is a good start. Thursday’s open would be a heartbeat lower, and its immediate recovery could quickly recover above prior lows before buyers lose control.

The low’s retest continues to be likely at ESz 965’00 (not idea) and 955’00. And there continues to be risk in the low’s retest – a test looks very similar to a new downleg, and testing prior lows is only half of the story – the rest of the story is that an appropriately-timed recovery would then be needed to avoid falling into the abyss.

Indicators and Internals.
RSI looked ugly at Wednesday’s close. It started looking better after the Globex open when S&Ps continued dropping. Already the contract has lost another 9 points, which is a start, but it’s not done.

Thursday’s opportunities.
A successful test of Wednesday’s pre-open low could be attempted more easily during the Jewish holiday today (Yom Kippur). Lower liquidity makes trending more difficult. That didn’t seem to matter last Monday on Rosh Hashana when the Dow closed down 777 points, and it might not matter today (or it could have the reverse effect). Jobless Claims is due pre-open.[/pay]