Trading Plan for 10/30
[pay]Pattern notes.
The latter stages of Tuesday’s surge had already fulfilled as much bullishness as had been signaled by the surge’s earlier stages. Anxiousness ahead of the FOMC news ensured that optimism wouldn’t get out of hand overnight. And the last hour’s Triangle that triggered new session highs also doomed those highs to failure. In short, sellers did everything they could to prevent buyers from gaining traction.
The question for Thursday is whether sellers expended all of their energy restraining buyers. The answer is important because despite Wednesday’s late plunge to new session lows, the cash session close was back above the morning’s lows. And Wednesday night’s Globex open quickly recaptured the post-close slip that had tried to retain sellers’ newly found traction.
Wednesday’s sellers will not have gained any traction for their efforts, not unless Thursday’s open immediately breaks lower under ESz 914’00-916’00 to resume Wednesday’s late drop. The trajectory need not be the same, and it probably couldn’t be any steeper. But any delay in sellers exhibiting their control would mean they probably don’t have any. And a retest of Wednesday’s 970’00 highs would become likely, perhaps up to 987’00-990’00.
Indicators and Internals.
MACD & RSI plunged along with price on Wednesday’s late plunge. The 3-minute RSI was oversold at the last-minute low, making its retest likely. But only likely, and not required, since the last-minute window isn’t controlling. Nonetheless, Wednesday’s price action did honor overbought and oversold readings, so Thursday’s price action is likely to, as well.
Thursday’s opportunities.
The interest rate cut helps to mitigate unfavorable news from most near-term econ reports. So almost any reaction to GDP and Jobless Claims at 8:30 might prove to be knee-jerk. Presumably the FOMC made their decision with some sort of knowledge of these data, so they’re likely to match the narrative. That means surprises are less likely, so trending is easier to come by. But much will depend upon the open expressing a firm opinion one way or the other.[/pay]