Trading Plan for 9/15

If buyers aren’t rewarded for absorbing sellers, twice… then really it’s buyers who are being absorbed. It’s all relative, too. The week’s buyers absorbed one or two sell-offs that almost pushed the market off the ledge. That’s a lot of disappointed buyers if they’re not rewarded soon for their efforts.

Pattern points… (Setups and technicals)[pay]
Make, or break. Wednesday morning’s sell-off had developed entirely under the prior week’s two “higher prior lows.” Exiting that timing window back above the higher prior lows suggested sellers were absorbed. Buyers tend to be rewarded for that, usually with a recovery back above that downleg’s origin.

Despite absorbing another round of weak-handed selling Thursday morning, bounces have been relatively shallow. Then Friday’s sell-off extended into the afternoon, probing under Wednesday’s lows.

Trending down to fresh lows and remaining in negative territory sounds pretty bearish. AnD yet, signals are mixed:

Despite twice probing lower intraday, Friday’s close was back above Wednesday’s lows — but not back above their consolidations. The morning’s 1976.50 bias-down target that attracted price down held its probes as support — but was still being tested at the close instead of recovered. And a fresh session low didn’t extend down despite an entire hour remaining in the session — but that final hour’s bounce couldn’t exceed the bias environment’s high, and held there for a half-hour.

Either buyers are racking up points for a huge reward, or else much stronger selling pressure is absorbing buyers. Either way, the next leg should be substantial. The final hour’s action suggests that sellers slow-played the decline, saving their energy for Monday. But if they’re not obviously in control coming out of the open, then it’s probably because the open is gapping up sharply.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This weekend’s Saturday Strategy Session begins at 9:30 ET, linked here, or found in the blog’s sidebar. We’ll review the bigger picture, and any stock chart requests.[/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.