Trading Plan for 8/27
If “S&Ps” were a household word… then hitting 2000 would relevant. But the round number influences are a function of the Dow, and irrelevant for other indexes that are less popular among retail investors. Any perception of this week’s price pattern flirting with 2000 is an optical illusion — the same pattern can be seen at other random price levels.
Pattern points… (Setups and technicals)[pay]
Now, 2003.50 — that’s relevant. It was Monday morning’s renewed bias-up target, and Tuesday morning’s bias-up target. It was met to within 3 ticks at Tuesday’s high. And that’s close enough to satisfy its buying pressure.
Just how the target was met is important, too. Rather than being a longstanding target, or left outstanding for several days, 2003.50 was met almost as quickly as it was put into play. The shorter cycle between creating and fulfilling a target tends to appear near a top.
Not that sellers exploited the satisfied buyers, not much. The reaction down tested the morning’s congestion, as was expected. And that was within the Double Top at Monday’s high, which is just less congested congestion. But the probe above Monday’s highs was prevented from extending, so Tuesday’s new high close was under prior highs.
Again, this behavior tends to appear near a top.
Not closing above the target prevented putting into play a higher target. And Tuesday afternoon’s timing windows remained within the same range as each other, so there is no upward momentum. That’s quite different from the superficial picture of gapping up, probing new highs, spending the entire session in positive territory and producing a new high close.
This “ineffectual pessimism” can persist indefinitely. Not infinitely, but indefinitely. Stepping in front of it can be dangerous. But not already reversing down at Wednesday’s open would have potential to probe even higher highs intraday.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Actually, any decline underway this week will need to have probed its last high by Wednesday morning. Otherwise, the seasonal bullish influence of a three-day holiday weekend could marginalize sellers through the weekend.[/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.