Trading Plan for 9/3

If Tuesday’s post-open sellers had been any more productive… then Tuesday afternoon’s buyers couldn’t have left the session unchanged on the day. And a new downleg would be underway already.

Pattern points… (Setups and technicals)[pay]
Tuesday was the real Labor Day, referring to the afternoon’s effort at retracing 61.8% of the decline from overnight highs. Being common for a correction. retracing 61.8% is as much energy as could have been expended without gaining traction for the effort.

The overnight retest of Friday’s 2003.75 pre-open high had been probed up to 2006.25. Its 13-1/2 point reaction down through the noon hour expended a lot of selling pressure. In fact, it held two tests of the bias-down signal without triggering it. So, sellers expended as much energy as possible without gaining traction for the effort — like the afternoon’s 8-point recovery that retraced 61.8% of the decline.

And that left Tuesday’s close essentially unchanged from Friday’s close.

All of which suggests the session was just a lot of noise. The 2006.25 overnight high doesn’t require being retested. But its retest is likely if sellers try and fail to reverse the trend down. Its retest is likely to visit 2013.50.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s bias environment was exited above the noon hour’s high, and the final hour was entered higher. Unless Wednesday’s open is already in decline, the afternoon’s bounce is likely to extend. Not necessarily for the entire session, or even through the noon hour, as anxiousness ahead of the afternoon’s Beige Book release inhibits trending.[/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.