Trading Plan for 10/31

Saturday’s Strategy Session… will last only 45 minutes from its 9:30am ET start. Don’t let that stop you from joining to discuss the market looking back and forward, the week’s setups, and to request an instant stock analysis.

Pattern points… (Setups and technicals)[pay]
Thursday’s overnight decline and Friday’s intraday highs confirmed that Thursday’s close did hold 1279.50 as resistance, and that the later excess above it came too late to be relevant. Overnight action had essentially declined, and intraday probes above 1279.50 were rejected.

The same goes for Friday’s close. Its close above 1279.50 was much clearer, but 1279.50 is less relevant than the 1282.25 close and 1283.50 high of its late test Thursday. Both held as resistance Friday.

That makes two consecutive sessions probing 1279.50 resistance without closing decisively above it. There is a greater burden of proof on sellers, so there is still potential for retesting the overbought RSIs at Thursday’s 1289.50 high.

A temporary bounce to fresh highs is likely also because of the Complex Symmetrical Triangle that formed intraday Friday. (The pattern is “complex” because it forms away from the high’s trend extreme.) Breaking higher first would also form a Double Top with interim uptrending support, also a topping pattern.

A new downleg is unlikely to gain traction without first retesting Thursday’s high. A decline can be productive, but probably not very substantial.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping down first Monday under Friday afternoon’s 1276.50 lows would signal a session-long decline since Friday’s last trending was up. An overnight retest of Thursday’s high would neutralize its attraction. [/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.