Trading Plan for 9/7

A victory for the… bulls? A lot of buying pressure was expended Tuesday just to visit resistance, in negative territory. Unfinished business remains outstanding below. The question is whether the bounce has ended. [pay]

Pattern points… (Setups and technicals)
Friday’s close under 1193.00 had put into play a test of 1165.50. It was attacked Friday, but never touched. It was probed thoroughly overnight (if 30 points can still be considered “thorough”), but it was never touched intraday. Not until Tuesday’s closing minutes.

Leaving 1165.50 outstanding Friday meant its attraction remained intact. By the same token — the other side of it, actually — touching 1165.50 before the close neutralized its attraction. And not closing above 1165.50 means that buyers gained no traction for their effort. Buyers would have served themselves better by not probing 1165.50, or by closing above it.

Tuesday’s buyers were not strong-handed. Two intraday buy signals fulfilled their objectives, without breaking higher through a relevant timing window. Price rose by default as sellers failed to exploit their own efforts. Meanwhile, any intraday gains are undermined by the entire session forming in negative territory.

One more characteristic that undermines buyers is the 1138.25 post-open low. It stopped short of touching the 1138.00 low, the morning’s bias-down target, despite retracing an interim rally to 1153.75. Impatient buying at 1138.00 does not make sponsorship any stronger, regardless of its rally to 1165.50.

What’s Next… (Outlook and opportunities)
Gapping up Wednesday must maintain a recovery above the gap(s) back to Friday’s 1170.00/1172.50 close gain traction for a bigger rally. If Wednesday’s open is not gapping up, then it’s very likely gapping down, or reacting down from filling Friday’s gap.[/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.