Trading Plan for 9/25

If Tuesday’s recovery attempt were a little more patient… then the afternoon would have rallied 10 points instead of falling 10 points. Rallying also would have marginalized sellers for more than a day, but buyers still have an opening.

Pattern points… (Setups and technicals)[pay]
Rallying Tuesday was already unlikely since Monday’s buyers had gained no traction for their rally effort. But oversold RSIs at Monday’s low were neutralized, so an afternoon rally would have been credible. Invalidating the morning’s bias-down would have added fuel — a lot of fuel.

But too much optimism became self-defeating. Trapped shorts were fulfilled, from both Monday afternoon and Tuesday morning.

Tuesday afternoon’s drop retraced back to Monday morning’s 1689.25 low, which is the Pivotal Low compared to the 1687.50 Actual Low that printed Tuesday morning. Their 1698.25 interim high was probed Tuesday afternoon, before returning to the Pivotal Low. This setup requires the actual low to also be revisited. Whether its test hold or gives way to a new downleg is irrelevant.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Once again, the only path higher is to gap above the afternoon’s highs. This time it is 1701.00, which would trigger a “session-long rally.” Otherwise, bouncing as high as 1696.00 would still be likely to resolve down. Without gapping up above Tuesday’s high or without yet testing Tuesday’s low, fresh lows are likely. [/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.