Trading Plan for 8/14

[pay]Pattern notes.
Wednesday’s last-minute bounce ended the day while still in the process of testing Tuesday’s last relative low of ESu 1285’25. Its recovery would have proved the afternoon’s rally had originated during a bias-up environment, allowing the rally’s uninhibited resumption Thursday. Failing to recover 1285’25 would have required the last-hour’s drop to complete its retracement back to the rally’s 1278’50 origin.

So it’s kind of important, since one points up, and the other points down.

Two-thirds of Wednesday afternoon’s 20-point rally was retraced down to ESu 1281’00 during the last hour, and the last-minute bounce retraced one of those thirds. Combined with ending the day at 1285’25 instead of above or below it, Thursday’s session remains vulnerable to the same choppiness that contained Wednesday’s price action.

Wednesday’s session narrowly avoided the “ineffectual pessimism” label. Sustained trending is unlikely before Thursday afternoon, but not for lack of trying. Ineffectual or not, ending the day without yet trending would only be bearish.

Indicators and Internals.
Despite NYSE down volume exceeding up volume by more than 50%, declining issues outnumbered advancers by only 20%. This tends to obligate the following session to reward buyers for their relative productivity. That’s one reason not to expect an immediate decline, or to expect an immediate decline to be recovered.
Thursday’s opening setup.
Jobless Claims and CPI start the day. Any venturing away from the 1285’00 area will be considered likely to return to it, and possibly through it by an equal distance. At least, that will be the general assumption through the noon hour. Either the open or close should lie beyond Wednesday’s range. At this stage of the pattern, Thursday morning is too soon for trending but perfect practice for afternoon trending.[/pay]