Trading Plan for 9/25

[pay]Pattern notes.
The steep slide from Wednesday afternoon’s high reflects pessimism. The question is whether it is excessive pessimism. If the drop is overdone to the downside, then it is vulnerable to getting squeezed before the weekend’s illiquidity.

Thursday afternoon’s new lows were recovered back into the day’s earlier range. But no higher. The 8-point gain wasn’t small, but it wasn’t productive, and it wasn’t a squeeze. A productive gain would have exceeded the 1049.00 mid-day high. A short-squeeze would have reached at least 1052.00.

After so much pessimism since Wednesday’s high – the relentless slide, Thursday’s mid-day extended narrow ranging – the only reaction was noise within the range. And rather than recover to close above prior highs where buyers could gain traction, prior highs held as resistance to refuel sellers.

Indicators and Internals.
No technical situations were left unfulfilled after the cash session.

Friday’s opportunities.
Thursday’s ranging is unlikely to launch another rally effort, but it could. Even then, the base is too unstable to launch a durable rally. The weekend’s illiquidity won’t improve much Monday during observation of the Yom Kippur holiday. This being a Friday, a morning bias-up signal should persist through the noon hour, increasing the difficulty for resuming the decline.

Resuming the decline at Friday’s open would be more credible. Thursday’s low bounced from simply touching the 1039.00-1041.00 target area’s upper-end. That optimism suggests the range’s lower-end will be tested, too. Maintaining its break would point down sharply intraday. The open’s initial trending will be tenuous, since Friday’s econ calendar is chock-full of high-profile items whose announcements are staggered.[/pay]