Trading Plan for 10/9

If not for Monday and Tuesday”s double-digit declines… then Wednesday”s complete retracement probably couldn”t happen. See? Sell-offs are good for the market. Keep telling yourself that if Thursday”s market starts retracing the ground that Wednesday recovered.

Pattern points… (Setups and technicals)
Retracing some degree of Wednesday”s rally is likely because it peaked within 3 ticks of its highest objective at 1964.00. That satisfied all available buying pressure without putting into play a higher target.

Also attracting price back down is the afternoon”s “no-bias rally.” Originating during a no-bias environment requires some future return to the 1933.00 bias-up signal that should otherwise define the bias environment”s upper-end. Rallying 22 points and 33 points above it don”t lessen the requirement. And its eventual retest often includes the actual 1:20 print, which was 1931.00.

There”s also Wednesday afternoon”s timing windows, which didn”t gain traction. Being far above the noon hour range, the bias environment exit did its job. But the final hour wasn”t entered any higher. And that”s despite probing a fresh high during the bias environment exit. Extending even higher after through the close? That often adds insult to injury.

Oversold RSIs at Wednesday”s 1918.00 low require an eventual retest, but that”s not immediately attractive. Neither is the two “V” bottoms — Wednesday and last Thursday — which do not a durable bottom make.

What”s Next… (Outlook and opportunities)
But the trend is your friend, until the end. The upside momentum must be disproved before a sell signal can trigger. Extending back to Monday”s highs should extend also through Monday”s highs. Then there might even be reason to forecast new highs. Otherwise, almost any delay to extending higher Thursday could open the door to a downdraft.