Trading Plan for 11/11

[pay]Pattern notes.
Up was down Monday, as Sunday night’s surge proved to be only a detour on the path to fulfilling expectations shared here Monday. Despite testing ESz 962’50 overnight, Monday’s low came within 2 ticks of Friday’s 905’00 low.

That’s a long way to fall and yet stop 2 ticks short of even touching the prior low, let alone probing it. The 15-point closing bounce’s credibility is undermined for not having originated from any meaningful test. The environment is vulnerable to gapping down under 913’00 or lower to reinstate the decline (not signaled, just vulnerable).

For all of its failures to sustain a rally, Monday’s buying did make some bullish progress, starting with Sunday night:

1) The 962’50 overnight high wasn’t a “new Globex trend extreme” that requires intraday retest, but it did probe the prior two sessions’ high which makes its eventual retest likelier than not.

2) The cash session’s 948’50 opening gap doesn’t require a retest either, but it’s magnetic attraction will try to inhibit selling meanwhile, and attract price up if it’s back in the neighborhood. Sunday night’s 941’00 gap open could also attract price higher.

3) Monday’s low held above Friday’s prior relative lows. This doesn’t help to form a bottom, but it does keep the ball in-play for potentially retesting the two pieces of unfinished business listed above.

The decline’s resumption still has a benefit of the doubt, targeting 890’00, perhaps lower to compensate for the last-minute bounce up to 920’00. But back above 924’00, confirmed above 927’00-928’00 would instead put into play retests of the unfinished business described above.

Indicators and Internals.
MACD & RSI deteriorated into Monday’s last-minute bounce, or at least did not improve. And that was some bounce. It was at least enough of a bounce that technicals should have improved if the bounce were durable. Unless Tuesday’s open were to gap up, I expect the technicals to point down.

Tuesday’s opportunities.
The government bond market is closed Tuesday for Veteran’s Day. No government economic releases, or any others, are scheduled. Much will depend upon overnight price action, which is only intended to refuel sellers unless 924’00 starts to be recovered.[/pay]