Trading Plan for 9/11
[pay]Pattern notes.
The S&Ps front-month rolled at Thursday’s open from Sep to Dec. I’ll reference the Sep contract prices in parentheses today as a convenience. All future blog posts will quote prices basis Dec.
The rally extended Thursday to fresh highs, trending up for the fifth consecutive session. The day’s 1039’50 high (1044’00) tested the next relevant resistance beyond 1010’50 (1015’00) by a 1-point margin. This and 1046’50 (1051’00) were never officially put into play, because buyers never gained traction while 1010’50 (1015’00) served as support to a six-day range that touched 1034’50 (1038’75).
Buyers never gained traction during the six-day range at August’s highs, and a 5% pullback followed. Characteristics of the past week’s rising prices are similar – key resistance holding tests through relevant timing windows, trending that originates during no-bias environments, brief or non-existent probes of support. The past week’s rally might prove to be a new rally leg, or an extension of the rally. But at this point it hasn’t disproved whether it is only a retest of last month’s highs.
The case would be different had this leg begun by gapping up Tuesday above 1022’50 (1027’00), instead of spending the day consolidating under it. Trending through this resistance doesn’t qualify as rejecting it. In the same way, a sudden, steep surge from present levels would be appropriate behavior for a shifting into hyper-drive. Otherwise, restrained buying will find it difficult to break free from its retest of August’s prior highs.
Indicators and Internals.
Technicals continued to be predictive of intraday price action, and continued to resolve intraday, leaving no new unfinished business in either direction.
Friday’s opportunities.
The last outstanding signals were essentially fulfilled before Thursday’s close. The first was a retest of the mid-afternoon high whose RSIs were simultaneously overbought. The second was a bounce target at 1040’00. The target was met within 2 ticks, while RSIs diverged negatively. There is effectively no unfinished business above, so any early surge to fresh highs would be sponsored by fresh buyers.
Modest opening selling pressure would suggest fresh sellers hadn’t arrived, although a post-open rally attempt could still be rejected. A more likely bearish scenario would quickly break under the 1034’00 area and reject Thursday afternoon’s new highs, extending lower without delay. More comments regarding the day’s econ calendar can be found here.[/pay]