Trading Plan for 9/16
If two opening selloffs can’t attract bottom-fishers… then surely a late short-squeeze will do the trick. Right? Not exactly. Monday’s narrowing trading range surged to fresh session highs when more than an hour remained until the close. But the balance of the session only dipped nonchalantly back down to unchanged.
Pattern points… (Setups and technicals)[pay]
On-again, on-again, off-again, on-again… Until Friday’s last half-hour ranged narrowly where it did, the ongoing premise has been that the past week’s decline was refueling buyers. Friday’s last half-hour had ranged narrowly at the bias environment’s 1977.75 high, instead of extending the prior half-hour’s rally from Friday’s low back up to the bias environment’s 1977.75 high.
That action, or lack thereof, suggested sellers were just toying with buyers, that they were slow-playing the decline’s resumption until after the weekend. In fact, Sunday night’s open spiked down 8 points. It’s complete recovery into the open quickly reversed back down 8-1/2 points.
Sunday night’s spike down was abnormally large, but not unusual, and neither was its post-open copycat. What is unusual is that there is usually a consequence. Whether punishing the failed sell-offs, or fulfilling them, the same session should close above a relevant resistance or under a relevant support. Monday did neither.
At this stage, I’m considering Sunday/Monday’s two opening drops to be the slow-played reward for Friday afternoon’s sellers. Monday afternoon’s probe of fresh highs may very well be setting up for more of the same — another reward Tuesday for Monday’s sellers slow-playing the decline. Not resuming the decline at Tuesday’s open would reinstate the premise that the past week’s decline was refueling buyers.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday’s bias environment exit and final hour entry were above the noon hour’s high, but not successively higher. Rallying at all Tuesday probably requires gapping up. Overbought RSIs at Monday’s 1979.00 require a retest. Gapping up or simply retesting 1979.00 without remaining above Friday afternoon’s 1977.75 high would likely reverse down through the morning. Fresh highs would otherwise be credible for extending higher intraday. [/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.