Trading Plan for 9/16

[pay]Pattern notes.
The decline reached several important milestones Monday. The prior low at 1200’50 was retested. The retest stopped at its 1196’00 target. The pre-open “new Globex trend extreme” was retested in the process. And yet, it’s not enough.

After rallying 36 points from pre-open lows, S&Ps had become sufficiently top-heavy to make new session lows likely. And new session lows arrived. But the path there was uneventful and hardly the stuff of bottoms. In fact, the first probe of new cash session lows was limited to 1 tick before bouncing. The pre-open low’s first probe was 2 ticks. In the midst of falling dozens of points in only several hours, optimism was still fighting for control. This, too, is hardly the stuff of bottoms.

An immediate bounce is still possible. Considering the relentless optimism and the technicals at Monday’s close (more on that below), an immediate bounce might arguably be likely. Of course, a gap up would leave outstanding the gap back to Monday’s close to inhibit durable rallies. As I recall the last “Black Monday” was followed by a somewhat dark Tuesday morning

Indicators and Internals.
MACD & RSI diverged positively among both 1-min and 3-min periods going into and coming out of Monday’s cash session close. That might be something buyers can build on overnight, but there’s no requirement for even a brief bounce from last-minute technical setups. Meanwhile, the spreads between NYSE up and down volume, and between advancing and declining issues, were wide ;)

Tuesday’s opening setup.
FOMC might adjust interest rates at 2:15. That usually sparks volatility on a slow news week. This is not a slow news week, so the customary pre-news paralysis might be less effectual than usual. Relatively subdued overnight price action might merit issuing bias parameters, but otherwise I would rather focus on patterns again.[/pay]