Trading Plan for 9/5

If not for the afternoon econ report… then would Wednesday morning’s rally have been more restrained, its buyers more patient? Probably. But no buying pressure was left outstanding to attract price higher, leaving the next most bullish scenario — namely, at least sellers didn’t gain traction.

Pattern points… (Setups and technicals)[pay]
The morning’s rally got carried away. Not gapping down did suggest that sellers wouldn’t be a problem, as did holding a test of relevant support. But the the one-sided 18-point move from 1635.50-1653.50 was likely exacerbated by the impending low-volume environment.

The 1653.50 resistance was met and held at a key time without exceeding it. The afternoon’s low-volume environment probably exacerbated the market’s lack of reaction, ranging sideways between 1651.00-1653.50. Probes beyond either end reversed back into the range.

Even a late plunge was probably exacerbated by the low-volume environment, as confusion surrounding an otherwise pointless headline triggered a drop from 1654.25 to 1649.50. Its reaction bounced back into the range, but only halfway, as the low-volume environment still inhibited trending.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Ranging sideways through several consecutive timing windows suggests there is no sponsorship for trending. But closing back at 1653.50 suggests that trending will be attempted, probably two or three times, each in alternating directions. I call it “equilibrium,” and while not a requirement, the setup usually produces actual trending (not just probes) beyond both ends of the range — probably to 1661.00 above and to 1643.00 below — before finally extending.[/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.