Trading Plan for 8/26

[pay]About that close (How the prior session ended)
Closing at least 1 point above Tuesday’s 1058.00 high Wednesday could have signaled momentum reversing up. It was attacked, but too late to be recovered, and by a leg that originated too late to be durable. Buyers weren’t totally shut out, since the new high wasn’t retraced back under the afternoon’s 1053.50-1054.50 prior high.

Pattern points (And technical influences)
The morning’s test of 1037.00 could have been the bottom of the two-week old decline. It was the decline’s next target, and its early test reacted up sharply. Perhaps too sharply.

Reacting too aggressively to a target can undermine the bottoming effort. A better bottom could have formed by duplicating Tuesday’s session-long ranging in negative territory. There was ample room to close above Tuesday’s 1044.00 low, but under Tuesday’s 1050.00 close. Cumulative pent-up buying pressure and “ineffectual pessimism” would have propelled Thursday’s open well out of harm’s way.

Instead, Tuesday afternoon’s probe of fresh session highs already released some of the pent-up buying pressure. It could have been productive had it recovered Tuesday’s highs above 1058.00.

The 1058.00-1059.00 area is still an intraday attraction, so long as its overnight test isn’t rejected back under 1050.00. The attraction might not be rejected at all, allowing a bigger corrective bounce targeting 1073.00. Only an immediate break under 1050.00 would be credible for resuming the decline without first briefly probing the 1058.00-1059.00 area.

Bottom line (My underlying premise)
This market doesn’t like news. It likes no news. Thursday’s pre-open news (Jobless Claims) leaves the day free from any other high-profile items. Friday’s calendar is a minefield, which might inhibit late-afternoon rallying. But if Thursday morning can’t rally throughout, then the afternoon will probably contain a downleg regardless.[/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.