Trading Plan for 9/25

If Wednesday’s Expiration Indicator had been bearish… then the market would have fallen much further than it did from Friday’s pre-open high. And that was 17-1/2 points. Actually, it would be on its way to falling that far, but from Thursday’s low. Tuesday we should learn whether the interim bounce created enough room to absorb all available selling pressure.

Pattern points… (Setups and technicals)[pay]
A lot of selling pressure had been expended already Friday from its 1462.25 pre-open high. The influence bled into Monday’s opening gap down and retest of the 1444.75 overnight low. Despite the momentum, Monday triggered two no-bias signals. So, no new unfinished business was created below. In fact, one of two attractions at 1447.75 was neutralized.

Thursday’s 1443.75 low still requires a retest. Missing multiple opportunities Monday to neutralize its attraction suggests that its eventual test will break lower, and not form a Double Bottom.

Meanwhile, overbought RSIs at Monday’s 1454.00 high require a retest. And the afternoon’s extension signal — exiting the bias environment above the noon hour’s high, and entering the final hour above the bias environment’s high — suggest another upleg will form.

The afternoon’s extension signal barely avoided being invalidated. It would have been invalidated by dipping back under its 1449.50 buy signal. Having dodged that bullet, gapping down Tuesday under Monday’s last relative low at 1447.00 would invalidate the signal by proxy. By the same token, the missed opportunity to extend higher late Monday should compensate for its delay immediately Tuesday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
If Monday’s recovery were to extend higher overnight, the trick will be not to expend all of its sponsorship before the open, like Friday’s open. Meanwhile, Tuesday morning’s econ calendar is especially busy.[/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.