Trading Plan for 9/21

[pay]About that close (How the prior session ended)
Rallying to new session highs into the last half-hour is too late for a retracement to gain traction. Monday’s 1139.75 pivotal high printed at 3:45, and it was probed by 2 ticks 7-8 minutes later. So, despite dropping after the cash session close to 1135.25, fresh highs are likely.

Monday’s 3:10-3:20 timing window trended up throughout to new session highs. This context makes the pullback’s purpose to refuel buyers, which also predicts a recovery. The pullback should bottom upon testing the 1133.50 area.

Pattern points (And technical influences)
Monday’s session resembled a session-long rally in two ways. Neither one was the rally: gapping up above Friday afternoon’s high, and printing the session high during the last hour.

Perhaps expiration prevented the setup from trending down into its close – Sunday night’s open did initially spike down. Assuming that Monday’s session was a session-long rally, the following session is likely to probe a higher high.

Valid breakouts from multi-session consolidations rarely occur on Mondays. Much more often they are disproved Tuesday by failing to close higher. Often enough, Tuesday’s close is back in the consolidation just broken.

Retesting Monday’s high would target 1141.00, and potentially 1145.00. A reversal down could close back under 1128.00 to begin invalidating the breakout effort. Tuesday afternoon’s FOMC announcement would ben appropriate catalyst – one way, or the other.

Bottom line (My underlying premise)
Confirming Monday’s breakout Tuesday would all but put into play a retest of April’s highs. Little about the interim price action is capable of launching a durable rally, not without being retested. And the interim lows would be all but in-play if Monday’s session were fully retraced through Tuesday’s close. [/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.