Trading Plan for 9/29

Happy New Year… Rosh Hashanah begins this evening at sunset. Markets will be less liquid, and maybe choppy, but not necessarily trending. More on that below… [pay]

Pattern points… (Setups and technicals)
Both 1-minute and 3-minute RSIs were oversold simultaneously at Wednesday’s 1143.50 low. This requires its retest, which can be accomplished overnight. Unlike intraday retests, the retest must be confirmed by then recovering the interim high (so far, that is 1149.50).

Simultaneously oversold RSIs also make the market vulnerable to a bounce. There is room to test 1158.00 without the decline losing traction. Not reversing down from there could extend up to 1165.50-1166.50.

No bounce is required, but a bounce would likely be only a correction. Following Tuesday’s “ineffectual optimism” by closing lower Wednesday is a signal that momentum has reversed down. This new context still allows a bounce, but the context makes any bounce likely to be absorbed.

None of the various support under Wednesday’s lows would be expected — normally — to produce any significant bounce. Just extending the Tue-Wed setup described above at Thursday’s open would trend down — normally — throughout much of the day. Perhaps it still would. But the Jewish holiday’s effect on volume makes trending more difficult to start.

What’s Next… (Outlook and opportunities)
The holiday’s reduced volume also makes trending more difficult to stop. I have found that until proved otherwise, it is best to assume the market is range-bound. Support and resistance tests are that much more capable of holding tests.[/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.