Trading Plan for 10/31

If the market began a new downleg Wednesday… then it’s probably only a correction. A deep correction, but only temporary. The more bearish path down would begin by trending back up.

Pattern points… (Setups and technicals)[pay]
Wednesday’s FOMC reaction was a lot of noise, ranging  choppily between 1760.00-1765.00. Then a bigger reaction fell sharply to range choppily between 1752.00-1760.00. The range was ratcheted down, and widened.

And it didn’t extend.

Let’s put that into context. Price had trended down into the FOMC announcement. The morning ranged sideways, and the noon hour fell. All of which followed a bigger slide from overnight highs 11 points higher. That’s a lot of selling pressure to expend.

But sellers did gain traction, closing under the noon hour’s lows which were already in negative territory. That tends to be rewarded the following day. A late bounce had tried to close higher, but only expended buying pressure — without it gaining traction.

So, lower lows are likely, putting the burden of proof on buyers. Closing under 1745.00-1750.00 would be a second consecutive lower close, while also being a trend change signal for closing under the 1752.00 prior low. Early weakness that recovers, or simply extending higher without delay, would target a retest of Wednesday’s 1773.25 pre-open “new Globex trend extreme” before a bigger downleg begins.

[/pay]What’s Next… (Outlook and opportunities)[pay]
I will be away from the market until Thursday’s final hour. There will be no intraday posts or Market Tour. I appreciate everyone’s indulgence![/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.