Plan for Thursday, Sept 6, 2007

Summary

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ES Resistance at 1480-1484, 1496-1500
ES support @1467-1470, 1436-1439

Open gap @1490
Open gap @1461
Open gap @1437

ES touched support @1469 several times today, and it should have been my signal to go long, but for some reason, I was just not very inclined to do so. I think part of the reason was because I was actually anticipating more downside, and that big push down never materialized. The other problem was that I forgot to have the 15min chart on my other screen, so I simply forgot about the support level @1467-1470.

Today was a bit of a stare down between the bulls and bears. After the morning drop, any move above 1477 could not be sustained, nor could any push below 1471. The biggest and cleanest run was the 10pt drop just before the 7am reversal time this morning, and any run after that was filled with 2pt chop and 3pt retraces. It was not such a bad idea to stand aside and watch the chop from the sidelines today.

For Thursday, the main question is which gap gets filled first? It is unusual to see so many unfilled gaps in the S&P500, and could be indicative of more churning ahead.

In the bullish scenario, if there is any sustained move above 1481 for more than a candlestick or two (on the 15min chart), and I will look for a long play of the gap fill @1490.

In the bearish scenario, if there is a sustained move below 1469 for more than a candlestick or two and I will look for a short play of the gap fill @1461.

In either case, since I will wait for confirmation before entering a trade, I am not expecting any big 10pt plays, more likely a 4 or 5 points.