Trading Plan for 11/12
[pay]Pattern notes.
Is there any more “good” news out there? This market seems very interested in absorbing it, and using the buying it generates to refuel the decline. This week’s version of the cycle started Sunday night. The Globex open reacted favorably to a trifecta of seemingly positive developments, triggering a gap up that extended sharply higher overnight. Sellers at Monday’s open swallowed the gain whole. Having refueled themselves, sellers also swallowed all of Friday’s last-minute surge.
No good news triggered Monday’s last-minute rally that bled into the overnight session. Perhaps it was the good news that Monday’s drop stopped short of breaking under Friday’s low. Regardless, the overnight rally did refuel sellers, producing Tuesday’s gap down under Monday (and Friday’s lows) that continued into the noon hour.
Another favorable news item (BSC/BLK) triggered a 30-point mid-afternoon surge. And the surge refueled sellers, so we know how this story ends – with a 30-point, one-hour drop back to the surge’s origin.
Sellers were refueled somewhat by a last-minute bounce, but a dip into the close expended most of that. The closing dip also made another bounce unlikely. There’s not much room to bounce overnight, but plenty of time to range narrowly, all with the goal of keeping buyers from gaining traction. This leg is still targeting 876’00, and almost any lower would put into play a retest of the 830‘s lows.
Indicators and Internals.
Tuesday’s NYSE down volume was about six times up volume, but it produced only about four times more declining issues than advancers. Buyers were more productive than sellers, which can obligate the following session to reward them, even if only momentarily. But gapping under the prior session’s low would render that reward moot.
Wednesday’s opportunities.
For the decline to resume without refueling sellers again, Wednesday’s open might need to gap under Tuesday’s 885’00 lows. So overnight selling would get a benefit of the doubt for extending down, especially under 890’00. Otherwise, buyers start getting a benefit of the doubt above 902’00-903’00. Econ reports have been absent this week, and they’re still thin on Wednesday.[/pay]