Trading Plan for 9/7

[pay]About that close (How the prior session ended)
Friday’s patterns targeting a test of 1105.00 were fulfilled early Sunday night. It was probed repeatedly, each time dipping back under Friday’s prior highs. Overall, the holiday’s Globex session ranged choppily around 1105.00. Its 1-point gain to 1104.50 gained no traction since that was flat with Friday’s cash session high. There is no “new Globex trend extreme,” overbought RSIs, higher objectives or other unfinished business above.

Pattern points (And technical influences)
Most of Monday’s holiday Globex fluctuations around 1105.00 actually hovered above 1105.00. Failing to extend a probe of higher highs is one thing, but failing to extend so much probing is another. The lack of improvement is underscored by the Nikkei’s strong rally, which had a greater effect in Europe. Clearly other markets played catch-up to S&Ps, without creating a premium to attract S&Ps higher.

More optimism would have been surprising. Although Friday did avoid closing above its 1100.00 opening print (closing AT it would have been bearish on a day that gapped up above prior highs), it was avoided thanks only to firming in the last 20 minutes. The morning’s high remained intact through Friday’s close, and now also through Monday’s Globex close.

This week could still extend higher. Recovering 1105.00 would next target an attack on August’s highs up to 1118.00-1119.00. Gapping down Tuesday under 1099.00 would reject all of the price action above it, including the holiday Globex session’s probing above 1105.00. Friday afternoon’s low was 1099.00, and Friday’s close rallied, so gapping down under 1099.00 would also signal momentum reversing down session-long.

Bottom line (My underlying premise)
1037.00-1038.00 had been the last downleg’s target. Last week’s drops retesting the area stopped optimistically short of forming a durable bottom. Regardless of the interim rally’s size and duration, it is still only a corrective bounce. The rally made the most of sellers being marginalized since last Wednesday morning. If they haven’t returned by Tuesday afternoon, then this corrective bounce would extend.[/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.