Trading Plan for 11/10
[pay]Pattern notes.
All four of Monday’s timing windows trended in the same direction. This combination is rare enough that no single resolution is likely. The session does have other influential properties that should be considered.
Perhaps most important is that the 1083.00 corrective bounce target was exceeded. The next higher target was met and essentially held at 1091.25, but this was beyond corrective retracement measurements. Closing Tuesday back under 1083.00 would help to reinstate the bounce characterization.
The objective of extending Monday’s rally would be to retest October’s prior highs above 1097.00-1098.00. Not a correction, but also not a recovery. This current leg’s intent would not be to renew sellers, and it wouldn’t be a new upleg’s breakout. It would be the upper-end of a bigger, and more distributive range, probably up to 1105.00-1107.00.
Monday’s substantial gain and steep slope expended a lot of energy. But it also gained traction if not invalidated back under 1083.00. Whether still a corrective rally, or a retest of prior highs, sell signals don’t get a benefit of the doubt until sellers regain traction through a timing window.
Meanwhile, it should be noted that the Dow made new highs. S&Ps did not. The outperformance means that bullish sponsorship is cautious. It may not matter currently since bearish sponsorship is hibernating. This relationship often appears towards the end of extended runs, and was a big clue in identifying October’s top. The indicator is not a sell signal until the relative performance persists through a down-day.
Indicators and Internals.
RSIs diverged negatively two or three times during Monday’s rally, but never in combination with 1-minute to the point of being a sell signal.
Tuesday’s opportunities.
Closing back under 1083.00 would help to reinstate the bounce characterization. So, a recovery would still be possible from any pullback shallower than 1083.00, or from its brief test as support. In case of higher highs, easily exceeding resistance at 1093.00-1094.50 would forecast the retest of October’s 1097.00-1098.00 highs being brief. The econ calendar is busier than Monday, which is to say it actually has an item or two, before Wednesday returns to radio silence. [/pay]