Trading Plan for 8/29

If Wednesday morning had capitulated… then a bottom would already be within hours of starting to form. The corrective bounce has instead refueled sellers for extending the decline. A near-term bottom is still possible, but less likely.

Pattern points… (Setups and technicals)[pay]
Capitulation had a chance to serve as this decline’s bottom following Tuesday’s steady relentless decline. Lower highs were barely rewarding each dip’s buyers, before lower lows quickly punished them. A sudden, steep and substantial downdraft would have been an appropriate ending.

Only Wednesday’s open declined, plunging momentarily to 1624.75. It had a capitulative character, but it was much too brief and shallow to qualify.

The balance of the session rally back up to range around Tuesday afternoon’s 1636.50 high. And above 1632.00. Closing under 1636.50 prevented the rally from gaining traction. Closing under 1632.00 kept alive the decline’s momentum. (The close was actually 3 ticks too high, but that was close enough to qualify, considering the other factors. Other factors like…)

Despite the morning’s rally, Wednesday’s sellers gained traction for their efforts. The final hour was entered under the bias environment low, and the bias environment was exited under the noon hour’s low. The close was under all of them. The only path higher Thursday is to gap up.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Between closing under 1632.00 (or near enough) and afternoon sellers gaining traction, a hold-short was considered to be compelling. It was immediately productive, extending down to 1629.75. But 1632.00 must continue holding tests as resistance to maintain the potential for extending down sharply overnight. [/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.