Every minor rally failed yesterday, but I wouldn’t bank on weakness ahead of Labor Day weekend. Seasonality should hold stocks boringly buoyant at worst, implying that any trading opportunities will be only for the nimble. The pattern shown looks like it could prove useful, more for bottom-fishing than for mechanical shorts from p or D. The p2 pivot is especially well located for this, and you may be able to get away with a stop loss as tight as 1934.75 if you put bid there. _______ UPDATE (11:21 a.m.) Buoyant at worst? Not hardly. This morning’s selloff has crushed the minor supports I’d given, implying that a bearish pattern of larger degree is at work. There are two, both viewable on the 60-minute chart: 1) A=2093.50 on 8/19; it implies minimum downside over the near term to 1861.50, with a possible mechanical short from x=1927.00; and, 2) A=1983.75, from 8/31. It has a D target at 1886.75, and the pattern has already been confirmed by a precise bounce from p2=1906.00 that is under way. Incidentally, the so-far 36-point decline is well within the limits of meaningless swings. That said, it is hardly bullish that it is happening ahead of a three-day holiday weekend when stocks typically do nothing.
