Trading Plan for 9/9

[pay]Pattern notes.
There isn’t much historical data available to compare 35-point gaps up. The market still responded to principles – the overnight rally was unlikely to extend into the cash session, and it didn’t. Not right away.The morning’s last downleg finally jived with one template, and then another. Several predictable targets culminated in a last-hour breakout to new afternoon highs.

S&Ps tested 1268’00-1270’00 into and out of the cash session close. That peak was important because an Ascending Triangle had formed since the noon hour’s low. Ascending Triangles tend to break initially in the wrong direction, then reverse more substantially in the opposite direction. And this triangle’s minimum target was met and held at the afternoon’s high.

The 1282’00 pre-open high is a “new Globex trend extreme” that requires a retest intraday. It’s probably in-play if Monday’s noon hour range under 1260’00 isn’t being threatened soon after Tuesday’s open. But I wouldn’t wait up late for any recovery if Monday’s noon hour range is probed too deeply.

Indicators and Internals.
1-min MACD & RSI deteriorated into Monday’s last-minute higher high. 3-min simply stopped improving along with price. The spread between advancing issues and declining issues didn’t keep pace with the up and down volume ratio, obligating Tuesday’s session to reward Monday’s sellers for their relative productivity.

Tuesday’s opening setup.
The morning’s bias-down parameter reflects Monday’s last-hour rally having been the afternoon triangle’s false break. It is possible that the triangle’s false break has yet more ground to cover before failing. Several econ reports due through the morning have catalyzed volatility often, so early trending can’t be relied upon to extend without interruption – especially in this environment.[/pay]