Trading Plan for 9/17

If the sell-off had extended another day… then Tuesday’s close could have been at new highs. Not really, but the point is that the past week’s sellers weren’t gaining any traction, and only creating more and more pent-up buying pressure.

Pattern points… (Setups and technicals)[pay]
Four of the eight days prior to Tuesday closed down. Six of those days probed lower lows. The last of those days was the first not to overlap the first. That’s a long time for selling pressure to finally be productive. Even then, 2-3 probes under Friday’s low were recovered back into the range. Not very productive.

Along the way at least two intraday sell-offs were absorbed, last Wednesday and Thursday mornings. Either one was sufficient to reward buyers with a retest a prior high. Absorbing both sell-offs increased that reward to include another prior highs. And that was before Monday’s failed probes of fresh lows.

So, there was a lot of pent-up buying pressure before Tuesday’s 1972.25 open (which gapped down, more selling absorbed). Its intraday rally to 1994.50 satisfied both original rewards, but none of the others.

Presumably, that’s coming, at least to 1997.00 (Tuesday afternoon’s 1996.25 bias-up target is “unfinished business above”), and potentially back to the 2001.50 intraday high and the 2002.75 “new Globex trend extreme.” Rather than stop there precisely, the high’s retest should visit 2005.50.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Only Tuesday’s bias environment exit exceeded its prior timing window high, so buyers gained no traction for their intraday effort. A pullback Wednesday morning ahead of the afternoon’s FOMC news would have room down to 1984.75-1986.25. Probing fresh highs Wednesday morning without first gapping up probably wouldn’t react well to the news.[/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.