Tuesday, September 04, 2007

Plan for Wednesday, Sept 5, 2007

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ES Resistance at 1496-1500
ES support @1480-1484, 1466-1470, 1436-1439

Open gap @1461
Open gap @1437

Today would have been a nice trend day were it not for the late afternoon selloff. SPY has carved out a nice uptrending channel in the past 4 sessions. It tagged the upper end of the channel, now I believe it is time to test the bottom end of the channel. It is already nearing the lower end of the channel in the overnight session, so we will get to see how much support is at the 1480-1484 support zone.

Note that in the past 4 sessions, every gap down has been filled, but every gap up has NOT been filled. Despite the low volume, buyers are very much in control of the situation here.

If ES can sustain any movement above 1491 for more than a candlestick or two (on the 15-min. chart), then it might be time to look for a play of NQ on the long side. Failure to hold 1480 pretty much means a drop to the next support level @1466. We may even see an attempt to fill the gap @1461, although I would be surprised to see it occur tomorrow.

The more likely scenario might be some range bound consolidation between 1485 and 1495 to digest the run-up of the past 4 days.

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