Trading Plan for 10/9

If the 24-hour dive through Tuesday’s close is the product of weak hands… then imagine what strong hands will do when they regain control. Of course, the bigger question they’ll answer is, which direction do they want to go?

Pattern points… (Setups and technicals)[pay]
Monday’s late-afternoon 1675.75 sell signal was too late to be the work of strong hands, no matter how productive it was, but it doesn’t require being retraced. Tuesday morning’s no-bias signal was invalidated, so its 1672.50 bias-up test’s objective is moot.

But it was still a no-bias environment that probed under the morning’s 1666.00 bias-down signal, requiring it to be revisited. Perhaps even higher, to 10:15’s 1668.00 print.

The late drop to fresh session lows at 1648.25 finished under the afternoon bias environment’s 1651.00 low. A hold-short setup could be considered — although fresh lows weren’t probed until after the position-squaring window began lapsing, that leg was already underway from 1657.00. In fact, fresh lows after the close are already testing 1647.00.  Next targeted would be 1639.50 and 1630.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Having said that, be aware — and beware! — that a rally leg is the alternative to extending the decline. Not sideways ranging, and not reversing up at a slow crawl. A rally leg would likely begin by gapping up above Tuesday afternoon’s 1658.00-1659.00 highs. And extend to at least 1666.00-1668.00.[/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.