Trading Plan for 9/11

[pay]Pattern notes.
Wednesday’s price action incorporated some of the same last-minute behavior as Tuesday. The last instance was the afternoon’s No-bias rally, whose first peak at 1244’00 was retraced back to the 1237’00 sell signal where another bounce retested the first. When the session’s last timing window of 3:20-3:30 got underway, S&Ps were reversing back under the prior high while MACD & RSI diverged negatively. A timing window is normally associated with breaking something, not retesting it.

The effect was the same, quickly dropping back to and through the sell signal on the way to 1330’00. This No-bias rally’s origin was probed by 1-2 points, then recovered, robbing sellers of their traction. A test of 1227’50 remains likely, but the lost traction requires either a bounce to refuel the last hour’s drop, or else a gap down to restart it.

Having to refuel does give buyers a chance to gain traction for prolonging or extending the bounce. Wednesday’s new session high was retraced back to its origin, but its origin held as support – the bounce was retraced, but not yet rejected. Regardless of when, I do expect the decline to resume. Wednesday’s low stopped far short of retesting Friday’s prior low, or closing high enough so that wouldn’t matter. The hesitation is due to optimism, and that’s not the stuff of durable bottoms.

Indicators and Internals.
15% more NYSE up volume than down volume produced 20% more advancing issues than decliners. The session was already a winner, but this doesn’t entirely mute Thursday’s obligation to reward Wednesday’s buyers for their relative productivity.

Thursday’s opening setup.
Several econ reports at 8:30 offer several opportunities shake things up. Back above 1235’50 would target 1241’25, where any higher could trigger a session-long rally. Just the opposite effect would begin under 1231’25 and 1227’50. Reminder: The front-month rolls to Dec expiration after Thursday’s <strike>close</srike> OPEN, NOT CLOSE. [/pay]