Trading Plan for 8/28

[pay]Pattern notes.
Thursday’s open seemed to be breaking traditions in place all week. Selling off steeply at the open, breaking to new relative lows, remaining under pressure through the morning. But this was just the inverse of Monday and Tuesday morning’s strength, this time testing 1015’00 as support instead of 1035’00 as resistance.

Like those sessions, Thursday morning’s trending also returned to the 1025’00 area. The resolution differed from each of the past four sessions by extending through 1025’00, and by closing above 1027’00. But this, too, shall soon pass, since it originated during a no-bias environment.

The question is when. And if not immediately, then what can be expected in the interim.

Had Thursday’s last hour done something – anything – other than range narrowly under session highs, the bounce would have been likely to resume Friday morning. Keep buyers in control with higher highs, or else neutralize the required retracement. Either path could have marginalized sellers, and Fridays have a way of leveraging that into something big. Instead, Friday’s open will essentially play defense, unless the opening effort is very strong.

Opening positive, but not slicing through or gapping up above the 1035’00 area, would still be abnormally vulnerable to reversing back down into negative territory. A stronger open would target 1043’00, and this being a Friday, its retracement would be unlikely before mid-afternoon if at all.

On any other day, immediately retracing the no-bias trending could have left time for an intraday recovery. But this being a Friday, the morning’s bias parameter tends to persist through the noon hour. So, a fast, steep dip would be bullish only if retraced just as quickly, before a bias-down signal could trigger. Gapping down would leave unfinished business above to inhibit trending down too far for too long.

Indicators and Internals.
Simultaneously oversold RSIs at Thursday morning’s low require its retest. RSIs were simultaneously overbought at the late-afternoon high. This is likely to be retested, but not required, since those RSIs were lower highs. Regardless, the attraction could be neutralized if retested overnight.

Friday’s opportunities.
In case of initial weakness, it will be difficult getting too bearish unless the 1025’00 area is broken decisively early enough. Early strength that also fails early would be a compelling short. That’s not to be confused with early strength that simply stalls – this being a Friday, any inkling that the week-long range is breaking higher could be a self-fulfilling prophecy, squeezing shorts and sucking in any sideline money sitting nearby. This could be triggered by initially gaining 6-7 points and then treading water. By contrast, sellers would have to lose a lot of ground quickly to start pushing crowds towards the exits.[/pay]