Trading Plan for 8/21

If not for Tuesday’s late drop… then its buyers might have gained traction. Instead, the minimum requirement for avoiding new lows may be to gap up Wednesday.

Pattern points… (Setups and technicals)[pay]
Tuesday morning’s “no-bias trending” above its 1649.25 bias-up signal wasn’t going to extend forever without retracing. But it could have extended a lot for a long time. No subsequent timing window extended the trending, keeping its near-term retracement potential alive and well. A late break under the afternoon’s narrow range fell to within 3 ticks of 1649.25.

3 ticks would be close enough to neutralize its attraction, especially if there were a reaction up, but there was not. Tuesday’s 1646.00 print at the 10:15 bias timing window may be retraced, too.

Meanwhile, Tuesday was an “inside day.” Its bounce can extend higher, like last Wednesday’s inside day extended down Thursday, but probably not without gapping up. In fact, having trended down into Tuesday’s close, gapping up Wednesday above its 1655.75 afternoon high would trigger a session-long rally. And it could extend into the weekend. The decline is otherwise vulnerable to resuming.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday afternoon’s FOMC Minutes could be a catalyst to resume or to reverse trending. It could also inhibit either before its release. Regardless, the afternoon is all but assured to be volatile, and the morning is likely to be, too.[/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.