Trading Plan for 10/9

If Monday’s weakness was a function of the holiday… then Tuesday should have little difficulty trending. It may have difficulty trending in only one direction. 

Pattern points… (Setups and technicals)[pay]
Friday’s rejection of the morning’s 1466.00 fresh high had suggested that sellers were strong hands. Closing flat at 1455.50 after probing negative territory down to 1451.25 prevented signaling that momentum had reversed down.

It didn’t prevent probing fresh lows Monday down to 1447.50, but the afternoon still recovered back to Friday’s lows as resistance. The entire session developed in negative territory, after gapping down, but without extending down. That setup suggests “ineffectual pessimism,” which would resolve upward.

Part of the problem is that Monday morning’s 1447.00 bias-down target remains “unfinished business below.” The rest of the problem is that Monday’s close was still testing 1451.00, keeping alive the attraction below. And the delay in testing it could be compensated down to 1444.00.

Unless lower levels were tested overnight and rejected through Tuesday’s open, or unless Tuesday’s open were simply gapping up to and through 1456.00, lower levels remain in-play.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday’s holiday meant no economic guidance. Tuesday’s isn’t much better. Alcoa’s (AA) earnings may be the most market-moving data.[/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.