Trading Plan for 10/27

then does that make last week”s rally more likely, or less likely, to be only a temporary correction? Urgency is an interesting difference between bull markets and corrective bounces. Bull markets take their time, backing-and filling, basing. But the past week”s rally, which extended from the prior week”s “V” bottom, didn”t spend much time trapping shorts. What”s the hurry?

Pattern points… (Setups and technicals)
Not that the recovery was inappropriate. In fact, that was the warning since Thursday”s low, that knee-jerk reactions to news are only temporary. This is as true in bull market as in bear. But that doesn”t mean the fallout is retraced as quickly in both bull markets and bear.

Bull markets thrive on the proverbial Walls of Worry. Time devoted to bearish arguments entices naysayers into shorting or not being long enough. Then the uptrend resumes, causing shorts and the underinvested to buy.

In contrast, Thursday”s overnight fallout — which was substantial — couldn”t even wait for Friday”s open before recovering. The open”s first surge recovered higher than Thursday”s best reaction. And the noon hour”s high completed the entire recovery.

Recovering 1920.50-1921.25 on Wednesday had signaled already that the decline”s last downleg was done, and that its origin would be recovered up to 1984.00. Extending to new highs remains possible, but not required. Regardless, the rally”s corrective behavior continues to suggest that the rally leg is only temporary.

What”s Next… (Outlook and opportunities)
This weekend”s Saturday Review begins at 9:30am ET. Click here to enter. We”ll discuss the market”s status and Sunday/Monday”s setups, then review any charts you request.