Trading Plan for 9/4

If Syria action delay weren’t announced until Tuesday… then buyers might have gained traction for their efforts. But confining the double-digit reaction to its lowest volume timing window, and not extending any higher intraday, only trapped weak-handed longs. That seems to have been the market’s intent.

Pattern points… (Setups and technicals)[pay]
Surely, the majority of observers of Sunday night and Monday night’s rally wondered only how much higher it might extend Tuesday above 1648.50. Filling the gap back down to Friday’s 1631.25 close was hardly being considered.

Yet, that was Tuesday’s low, attacked to within2 ticks and probed by 2 ticks, fulfilling the afternoon’s bias-down target. That price action also represents chipping away at 1632.00 support, a prior low that had attracted last week’s drop.

1632.00 has produced several bounces, ranging from small to substantial. It remains capable of doing so again. That doesn’t minimize the vulnerability to Wednesday’s open extending down sharply under 1632.00. So much time was spent Tuesday chipping away at its support, that rallying here would be suspicious.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The vulnerability to extending down immediately is based on the reaction up from 1632.00 holding a test of its 1639.00 bounce limit, and the cash session closing under 1637.00. It did. Futures did surge to close 2 ticks above 1639.00, but any initial selling pressure under 1633.00-1634.00 would be likely to resume the decline. [/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.