Trading Plan for 9/18

Had Friday’s lows probed as low… as Monday’s lows, then the weekend would have been greeted from sharply negative levels. But the lower low was delayed until Monday, and it was recovered back to Friday’s lows. Can buyers exploit the setup?

Pattern points… (Setups and technicals)[pay]
It took long enough, but Monday morning’s indications for probing under the 1454.00 overnight lows were finally fulfilled during the afternoon bias environment. A morning test could have recovered to renew the rally by then. Instead, the fresh lows extended into the last half-hour.

The 1450.50 low wasn’t breathtakingly removed from the prior range, and it didn’t damage the rally’s chart. Trending down on the Rosh Hashana holiday’s lighter volume wouldn’t have confirmed a deeper dip. And the dip was relatively shallow compared to the Crude Oil plunge on SPR rumors.

When the drop has finished, then overbought RSIs at Friday’s 1468.00 high will want to be retested. The drop may yet need to test fresh lows in the 1448.00 area before ending. Any lower would essentially put into play a complete retracement of Thursday’s FOMC surge. Recovering 1456.00 overnight would be credible for extending higher already.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday’s continued pullback off of Friday’s high is interesting. It plays out the clock on retesting the prior high, which would be very interesting if done on Wednesday. This week’s Wed-Ex (Wednesday Expiration Indicator) would have something to say about that.[/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.