Trading Plan for 9/27

If Wednesday’s fresh lows were only holiday related… then Thursday won’t be in decline past the open. Good luck preventing a deeper decline if Thursday’s can’t avoid probing under Wednesday’s lows.

Pattern points… (Setups and technicals)[pay]
Wednesday’s lower participation didn’t help to retrace one bit of Tuesday’s drop. And it didn’t prevent Tuesday’s drop from extending down sharply. But slower volume did inhibit the drop from extending much beyond the opening hour. And it also inhibited the drop from being recovered.

The 9-1/2 point bounce from 1424.00 to the afternoon’s 1433.50 high was retraced by 7 points back down to 1426.50. Oversold RSIs at the low still require a retest, probably to 1421.25 where 1423.25 would have sufficed Wednesday.

Opening Thursday back above Wednesday afternoon’s 1433.50 high after testing 1424.00 overnight would be credible for rallying into the noon hour. Just opening above Wednesday afternoon’s highs would get a benefit of the doubt for some sort of squeeze, no matter how short-lived. But not even holding 1424.00 through Thursday’s open would suggest another dive like Tuesday is underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A lot of economic reports are due Thursday. Their relevance has been drowned out recently by QE3 rumors and Eurozone headlines. I suspect that they will become more influential to price action again, sooner rather than later, and probably on a day with a lot of econ reports due. [/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.