Trading Plan for 11/10
[pay]Pattern notes.
Friday’s last 15 minutes saved the session from earning clear title to being “ineffectual optimism.” That’s when Thursday afternoon’s highs were finally probed despite two previous attempts, and an entire day spent in positive territory. The closing surge peaked at 937’50, which had been made possible by earlier patterns intraday. But apparently buyers failed to gain traction because of excessive pessimism. That was finally discounted at 908’50 by the reaction to Obama’s speech.
A break of the session range is always suspicious when its sponsors can’t get it done earlier while the opposition has time to fight back. Friday’s late surge is no different. In fact, it’s durability is even more suspect since its peak retraced 61.8% of Thursday’s entire decline. Then there is the following chart:
The two far right red lines (guess whom they voted for) depict the steep drop from Tuesday’s high and the shallow bounce Friday. The two left green lines show the prior week’s rally and last Monday’s shallow dip. The principle is the same: mild dissent within big moves isn’t dissent, at all. Tuesday’s resumption of the prior week’s rally started too optimistically to be maintained. Calmly resuming last week’s decline would give it a better chance to extend down past the outstanding 890’00 target.
Also outstanding is the gap back to recent lows. And that should be within the context of a scary downleg targeting 787’00, perhaps in time for the January Effect to spark the Obama bull market. If Friday’s bounce doesn’t resolve down soon, then optimism will stretch its legs for perhaps one last time before the Obama bear market begins.
Indicators and Internals.
Before Friday’s last 15-minute rally, sellers had been counted out 15 minutes earlier, That’s when technicals diverged positively while the reaction to Obama’s speech hit its 908’50 low. By any measurement, the signal has already been productive, and leaves no unfinished business necessarily attracting price higher.
Friday’s opportunities.
Little by way of economic data awaits Monday’s market. Or on Tuesday’s Veteran’s Day holiday. In fact, the government bond market will close early ahead of the holiday. Be mindful when this popular destination for flights-to-safety is shut down, because stocks can gyrate unusually when the hedge isn’t available. There is almost an entire session before that becomes relevant.
Meanwhile Sunday night’s open has room down to 927’00-928’00 before sellers start to gain traction, and under 924’00 before sellers start to gain it. That would reject Friday’s steep, last-minute trending emerged from what was likely to be a flat range into the close. An alert subscriber reminds me of the prior instance when this happened, and it didn’t go well for the last-minute trending. But I’ll become more bullish if 938’00 maintains a recovery through the open.[/pay]