Trading Plan for 9/4
[pay]Pattern notes.
Tuesday’s session was one of the most bearish I’ve seen in some time, and the past two weeks’ lows around 1263’00 still required a retest.Wednesday’s session probed lower lows before recovering through the noon hour. A late-afternoon attempts to resume the decline was also recovered.
Wednesday’s close actually ended the day almost unchanged from Tuesday’s close. The morning’s probes under 1266’00 weren’t any more accumulative than the afternoon’s attack on 1266’00. Each produced a 10-point bounce, and only one has failed so far.
Wednesday’s session nearly closed above the upper-ends of the two consolidations that developed off of the 1263’00 low. The same factor Tuesday led to Wednesday’s steep drop, and Wednesday’s recurrence should produce a drop Thursday. A second consecutive reaction should not hope to recover or delay the decline like Wednesday.
Meanwhile, recovering above Wednesday’s 1280’00 highs would create a helpful posture for absorbing any negative reaction to Friday’s Employment Situation report. And there isn’t much use for absorbing negative reactions when there is unfinished business at lower levels that requires being tested sooner rather than later.
Indicators and Internals.
Internals were essentially flat with each other, except that they weren’t. Slightly less NYSE up volume than down volume produced slightly more advancing issues than decliners. Technically this is a positive divergence that obligates Thursday’s market to reward Wednesday’s buyers for their relative productivity. But spreads weren’t wide either way to have confidence. Anyway, I already suspect that the initial trending attempt will fail, since RSI barely had a pulse during the last hour’s rally.
Thursday’s opening setup.
Wednesday’s close recovered from new lows to close back above the prior day’s low. Recovering Wednesday morning’s 1280’00 pivotal high would amazingly offer a reason to delay the retest of last week’s lows, in favor of probing the low 1290‘s as resistance. Just gapping up above 1278’00 would start to be bullish. Meanwhile, back under 1271’00 would reject Wednesday’s last-hour, no pulse rally, and reinstate the morning’s decline.[/pay]