Trading Plan for 10/22

If the Employment Situation report triggers one response regularly… then might it trigger a different response when released on Tuesday instead of Friday? The delayed report will be released before Tuesday’s open. Monday’s narrow range within a narrow rally suggests that the reaction will be volatile.

Pattern points… (Setups and technicals)[pay]
Monday’s sideways ranging offered no new signals. There was no unfinished business outstanding to attract price in either direction. A pre-open high that didn’t require a retest was nevertheless retested up to 1742.50. Its reaction in the opposite direction to 1734.75 left unfinished business below at its oversold RSIs.

Post-close developments had no impact on the ES. Not even on NQ. But a lot of impact on NFLX which spiked up sharply in reaction to earnings. It was reminiscent of last week’s GOOG earnings reaction. It’s interesting that momentum stocks are behaving like their bubbles are inflating, yet launching barely a ripple on the broader market.

There is nothing predictive from this relationship, which can only serve as a warning of thin buying sponsorship. But considering that this rally is already living on borrowed time, and that it just spent an entire session hesitating, the anecdotal may be more insightful than valuations.

[/pay]What’s Next… (Outlook and opportunities)[pay]
One inhibition Monday afternoon was likely Tuesday morning’s Employment Situation report. That, too, shall pass. We don’t have a history of delayed NFPs, or Tuesday NFPs, so we don’t have any extra insight into the market’s reaction. For example, the Employment Situation reaction is usually reliable for not reversing any initial trending in the opposite direction. But that’s on Fridays, when the weekend’s illiquidity is inhibiting countertrend sponsorship. There is no such inhibition Tuesday.[/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.