Trading Plan for 8/27

No Saturday Strategy Session… this weekend. Don’t hesitate to request a stock analysis in the comments section of this blog post.

Pattern points… (Setups and technicals)[pay]
Friday’s buyers were pretty productive after holding 1396.50-1397.50 through the open. The weekend’s impending illiquidity leveraged the sudden lack of selling pressure and recovered 1399.50. That triggered a squeeze to test 1407.00 by 1 point.

As productive as this was, the same setup would have been extremely bullish if its timing had been accelerated by less than hour. Instead, the rally was sponsored by weak hands. Not as weak as initial selling, which held 1396.50-1397.50 through the open. But not accumulative. A running correction that developed around 1403.00 between two surges suggests as much.

So, Friday’s rally was sponsored by weak hands, filling the gap back to Wednesday’s 1411.75 cash session close, without closing above it. In other words, buyers expended a lot of energy just to neutralize an attraction above, without gaining traction for their effort. Despite futures settling at 1410.50, the morning’s 1408.00 high was still being tested within 3 minutes of the cash session close, so its resistance is considered to have held.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Extending Friday’s bounce on Monday would require gapping above 1414.00, the upper-end of the structure that contains Wednesday’s 1411.75 gap. Tuesday’s 1419.00 opening gap would be targeted, and extending above 1420.00-1421.00 would target a brief test of 1428.00. Alternatively, breaking back under 1404.00 through Monday’s open would signal that Friday’s weak-handed buyers were already facing the consequences, putting into play fresh lows.[/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.