Trading Plan for 9/7

For two weeks, buyers had absorbed… repeated probes under support. No probe broke lower. Tests of resistance weren’t breaking higher, either. But with the high’s retest outstanding, resistance was holding because of weak hands. That’s not who deserved being rewarded. Buyers deserved it, and they finally were.

Pattern points… (Setups and technicals)[pay]
The attraction back to 1419.00 — the two-week old gap open above prior highs — was finally neutralized soon after Thursday’s open. Closing more than a couple of points above it would have put into play 1428.00. It was tested by late-morning.

Actually, Thursday afternoon ranged relatively narrowly at 1428.00-1431.00. Of course, most ranges would be relatively narrow when compared to the size of Thursday morning’s 21-point surge. Trapped shorts that faded the morning’s rally were squeezed into and out of the futures close up to 1432.25. But 1428.00 was essentially still being tested.

Reversing immediately from a new high close would leave unfinished business above back to Thursday’s 1431.00 close. Gapping down under a relevant level, like 1419.00, would leave that gap outstanding above for some time. But not reversing down through Friday’s open would be more vulnerable to extending higher intraday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Friday morning’s Employment Situation report probably must react down sharply through the opening 15 minutes of volatility or else marginalize sellers through the noon hour. Any dip shallower than 1421.00 would be likely to recover, or else unlikely to produce a durable downleg.[/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.