Trading Plan for 11/1

If Wednesday’s attempt to break higher was false… then it should be obvious at Thursday’s open. Otherwise, the alternative is for making it obvious that Wednesday’s last-minute plunge was itself ineffectual pessimism, by immediately rejecting the entire slide.

Pattern points… (Setups and technicals)[pay]
Try, try again? Wash, rinse, repeat. Wednesday afternoon’s buyers took a perfectly good rally signal and got carried away with it too much, too soon.

Having held the noon hour’s test of 1401.00-1402.00 support, no lower objectives were in-play. Firming back up to 1407.00 through the bias environment didn’t expend too much buying pressure. Anyway, a corrective dip to 1403.25 worked off any excess. That allowed trending up aggressively above 1406.00 through 3:10-3:20 to trigger a rally into the close.

Buyers delivered, and then some, testing 1309.00 resistance at the wrong time — they needed either to break through it by then, or not to have touched it at all. I noted earlier the consequence of not resuming the rally into the position-squaring window would be a dip back down into 1405.00-1406.00. The cash session dipped to 1406.00. Then futures plunged to 1401.00-1402.00.

That was too late to close too low to marginalize buyers. The excessive pessimism created a vacuum that should propel another rally effort if recovered back above 1405.00-1406.00. Regardless, don’t forget the past week’s basing is still only potentially bullish. It remains vulnerable to breaking lower until some relevant window were to recover some relevant resistance.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Happy Halloween tonight! And best wishes to those who are still dealing with Sandy’s effects.[/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.