Trading Plan for 8/28

If Tuesday’s drop were distributive… then where is the capitulation? A lot of selling, relentless and extended, but also seemingly controlled. Wednesday needs to open the floodgates, or else a bottom will become likelier sooner rather than later.

Pattern points… (Setups and technicals)[pay]
Monday’s hold-short extended overnight. That was not predictive. But the morning’s bounce didn’t recover the overnight drop. In fact, the balance of the morning ranged sideways. That was predictive.

And that predicted buyers were marginalized.

Since my methodology is at its core a process of elimination, marginalized buyers wasn’t necessarily bearish. Bouncing into the bias environment’s exit could have led to sideways ranging. But bearish factors — like attractions to unfinished business below — tilted the scale.

More attractions below are outstanding. The next “lower prior high” is 1618.00-1621.00, not too much lower. It could have been met Tuesday. But although the morning’s bias environment exit trended down relentlessly through the afternoon, the decline’s pace never accelerated. The lack of a capitulation leg is eery.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The close did not recover a prior high. Neither did it trend down substantially and borrow selling pressure from Wednesday — plenty was left on table. A hold-short through the close is compelling, but I wouldn’t hold short overnight above 1632.00.  [/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.