Trading Plan for 8/9

If there was any reason for retracing all of Thursday morning’s plunge… then it probably wasn’t just to try plunging again. The afternoon’s narrow ranging delayed a resolution, but it should not have changed it.

Pattern points… (Setups and technicals)[pay]
Thursday morning’s 13-point plunge was stunning. More stunning was its complete retracement into the noon hour’s high. Although the recovery was no higher, and no quicker, such big drops aren’t usually recovered so soon.

Yet, Thursday’s most stunning development was the afternoon’s narrow 3-point range.

The prior several sessions had essentially ranged sideways, too. Tuesday’s was unlikely to range sideways, Wednesday’s was almost required not to range sideways. Thursday afternoon’s ranging can be dismissed for needing to absorb the morning swing’s shock to the system, although it didn’t have to — not after three prior afternoons ranging sideways, too.

But the most stunning development yet would be not resuming the rally at Friday’s open.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A last-minute dip Thursday finally probed beyond the afternoon’s range down to 1692.25, reacting back up as sharply into the futures close. An overnight retest down to 1690.75 should also be recovered and extended higher. “Unfinished business above” now includes Thursday afternoon’s 1699.00 bias-up target, along with last Friday’s off-setting 1706.00 bias-up signal. If they’re not attracting price higher into the weekend, then oversold RSIs at Thursday’s 1684.50 low can attract price lower.[/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.