Trading Plan for 9/14

Thursday’s FOMC news had… a tremendous effect on price. Both in terms of size (27-28) points and trajectory (90 minutes), the leg fit every definition of a “blow-off.” But that doesn’t mean it’s done.

Pattern points… (Setups and technicals)[pay]
An earlier blog post pointed out how rapidly upside objectives were being fulfilled. From same-day and thirty minutes, to fulfilling a target before it was officially triggered. That’s no way to extend a rally.

At least, not a durable rally.

Thursday afternoon’s FOMC reaction was able to create another attraction above, leaving it outstanding to resume the rally. Overbought RSIs at its 1457.25 high require a retest. A quick recovery from its reaction to 1450.50 would have peaked at 1458.00. The delay creates potential to 1462.00.

Testing and rejecting either overnight could again leave no unfinished business above. But opening much lower would likely leave outstanding a gap back to Thursday’s close, whose attraction would inhibit a decline.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Global reaction is likely overnight, extending Thursday’s rally. And it may seem like a circular argument, but S&Ps should extend higher in sympathy. There is room for a pullback before Pac Rim exchanges open. But not extending higher ultimately would suggest a bigger downdraft coming. [/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.