Trading Plan for 8/31

Thursday’s gap down… tried to extend lower. Instead, it was retraced back up to its opening print. Not that buyers gained any traction for their efforts, but neither did sellers. At least, not Thursday’s sellers…

Pattern points… (Setups and technicals)[pay]
Thursday’s sellers gained no traction since the morning low held as support. That doesn’t prevent Friday from extending Thursday’s decline. But it does require the decline to begin by gapping down. Not gapping down at Friday’s open would be unlikely to extend the decline before Friday afternoon.

Friday afternoon has become vulnerable to trending down. Wednesday’s 3-Day Weekend indicator triggered by proxy at Thursday’s open. It triggered a late bearish signal. This suggests that price will trend down into and out of the weekend.

Triggering late makes any signal less reliable, including the 3-Day Weekend indicator. Any bearish consequences would be marginalized if Thursday’s session were rejected by gapping back up above Tuesday-Wednesday’s lows.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A week’s worth of attention has been given to Bernanke’s keynote speech Friday morning. Thursday’s late 6-1/2 point plunge reflected the pessimism discounting his remarks. [/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.