Trading Plan for 9/16

If Jim Grant weren’t speaking on CNBC at the time… then would Friday’s last-minute decline attempt have attacked the morning’s low, or broken it? The low-volume environment leveraged the reaction to his comments into a 5-point surge. Trending down that much would have touched the overnight low.

Pattern points… (Setups and technicals)[pay]
Friday’s lack of trending was interesting for its predictability. One of several Friday Factors is an early test a support or resistance. If support or resistance were to hold its early test, then we would know that the test was sponsored by weak hands. Having been sponsored by weak hands, the trending attempt is then likely to be retraced entirely.

Friday’s early drop from 1682.00 to 1675.00 was retraced entirely. The drop was sponsored by weak hands, so its recovery required no sponsorship at all. Four hours of ranging narrowly between 1679.50-1681.50 proved that the recovery had no sponsorship. It also proved that the session’s only sponsorship was bearish.

A last-minute attempt to dip again was recovered back into the range at the cash session close. The dip stopped 1 tick short of touching its 1678.50 confirmation before reacting back up into the range — and then through it to attack 1684.00. The trigger was probably Jim Grant on CNBC advising not to expect tapering from Wednesday’s FOMC meeting. It was late enough to have a highly leveraged effect, but too late to invalidate whether Friday’s sellers were still the stronger hands.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join us Saturday morning at 9:30am ET for the weekly Strategy Session. We’ll update the ongoing analog to 1987’s top. And there are a couple of very interesting possible setups for starting new week, each one being very predictive. Also, bring your stock analysis 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.