Trading Plan for 11/1

No, seriously – this market really doesn’t want to trend… Two high-profile econ reports after Friday’s open and a high-profile terrorist threat didn’t shake things loose. What’s it going to take to move the market out of this comfort zone – a mid-term election and an FOMC meeting?[pay]

Pattern points… (Setups and technicals)
The range defined by Thursday’s last half-hour essentially defined Friday morning’s range. It was just a couple of points too narrow to also define Friday afternoon’s range. Now six consecutive sessions have finished within 2-3 points of each other, around 1179.00-1182.00. And two consecutive Fridays have ranged narrowly throughout the day.

The UPS threat wasn’t going to be resolved before the close. So, it was surprising that the session didn’t gravitate to the range’s lower-end. In this context, price action was more optimistic than pessimistic. The day’s relatively narrow range means its sponsorship was weak hands. So, weak hands are optimistic.

Optimistic weak hands is bearish from a contrarian perspective, albeit not immediately. Rather, their sponsorship warns that a rally effort will not gain traction. It does not prevent the rally effort. Friday’s closing action did open the door to another rally effort, assuming no major weekend event.

What’s Next… (Outlook and opportunities)
Friday’s last-minute bounce into the cash session close was fully retraced after the close. Only the bounce was retraced – nothing extra. But it is the quick retracement that offsets enough optimism to create a vacuum, and that vacuum can suck the next open higher.

Recovering from another quick dip would add power to the vacuum, and to an opening rally. A dip has room down to 1174.00 before beginning to suggest the open might be defined by weakness instead.

Regardless, the first trending attempted from an extended narrowing range tends to be false. And Tuesday’s unknowns don’t make trending any more likely. So, initial trending in either direction may not endure through the bias timing window.[/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.