Trading Plan for 9/23

[pay]About that close (How the prior session ended)
3-1/2 hours of ranging sideways off the 11265.50 lows could not break lower. A 5-point surge to 1132.75 at 2:30 relieved the consolidation’s pressure. Plenty of time remained to have a rubber band effect, and to give a running start to another sell-off. RSIs even diverged negatively into the surge’s retest to reverse price down. But despite sellers having these breezes at their backs, the surge’s 1128.25 low retraced only 61.8% into the midday consolidation.

Pattern points (And technical influences)
A 61.8% retracement is healthy. Closing any lower would have given sellers traction. Stopping any higher would have left an objective outstanding below.

Spending almost an entire session in negative territory without trending down can be “ineffectual pessimism” which tends to resolve positively. Wednesday’s session did probe positive territory at the open, but sellers did ultimately control the session. And the close clung to the prior session’s low.

Wednesday’s trapped shorts could have been squeezed during the last 60-90 minutes. So long as Wednesday’s low isn’t broken overnight, the pent-up buying pressure should almost literally explode higher Thursday. The setup usually gains some ground overnight. Closing above 1131.00 or 1132.50 would have argued for holding long through the close.

Holding the 1128.00 area helped to keep alive potential for retesting the Tuesday’s 1144.00 high, whose 3-minute RSI was the highest overbought. Simultaneously overbought RSIs at Wednesday’s 1139.75 high also require a retest. Chipping away at 1128.00 support will make its eventual break easier. Delaying a bounce past Thursday’s open could make the break immediate.

Bottom line (My underlying premise)
The 1128.00 support. A 61.8% retracement. Ineffectual pessimism. Unfinished business above. Conditions suggest a bounce is free to begin. By the same token, not exploiting the setup would be bearish. Overbought and oversold RSIs are almost always retested. When they are not, there tends to be a massive move underway in the opposite direction.[/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.