Trading Plan for 9/18

[pay]Pattern notes.
MACD & RSI diverged negatively into Wednesday’s last-hour high at ESz 1194’00, triggering a domino effect that led to new session lows. The divergence put into play a retest of the 1177’50 prior low, too close to the session’s last half-hour to be recovered. And since that was back under the noon hour’s high, the recovery setup was doomed to produce just the opposite. The magnetic attraction back to Tuesday’s 1163’00 pre-open low was the final nail in the coffin.

Wednesday’s wide swing was just one more opportunity to absorb buyers without letting them gain any traction. MACD & RSI positive divergences were no longer ignored, but the decline no longer needs that tactic, because now it has the traction of new lows to keep it alive.

That doesn’t close the door to another corrective bounce targeting 1172’00-1173’00, or 1182’50-1185’00. Not bouncing might be more surprising, considering the current perpetual engine of failed rallies. But not bouncing would be a more normal reaction after so many failed rallies. It might soon be the reaction, similar to the environment leading into 1987’s Black Monday.

Indicators and Internals.
3-minute RSI was oversold at the last-minute price low, indicating that a corrective bounce would fail.

Thursday’s opening setup.
Jobless Claims at 8:30 is followed by LEI and the Philly Fed survey at 10:00. This is the last trading session before Friday’s Quadruple Witch expiration. Rest up, drink plenty of fluids, and have a healthy breakfast. Things are finally going to get interesting.[/pay]