Trading Plan for 11/12
[pay]Pattern notes.
It’s all over but the waiting. The retest of prior highs, no overnight highs left untested, the morning’s bias-up target met and held. And as if to offer a parting gift, the session lows stopped optimistically short of filling the gap back to Tuesday’s cash session close. That could have been bullish, but it wasn’t exploited before the close, so it is considered “ineffectual optimism.”
There’s also the morning’s drop, whose selling pressure was fully absorbed by the morning’s rally that preceded it. The chart wasn’t damaged, and the rally was free to resume. But it didn’t. Again, what could have been bullish, wasn’t.
The bigger picture is that the rally from Nov 2’s lows has been a corrective bounce. A couple of optimal candidates for its peak have come and gone, at 1071.00 and 1083.00. The correction’s next stop was prior highs, which Wednesday fulfilled.
A retest of prior highs, and a probe of the range’s upper-end, are both forms of a correction. This probe of new highs originated from under the prior high closes. Closing back under them in the same session reflects solid resistance and expended buying pressure, which is a “Gotcha!” setup.
These prior high closes equate to 1094.50 and 1096.00, which were still being tested at Wednesday’s close. But it is important to note that this setup either signals the trend reversing down, or it doesn’t. Failing to trigger the setup does not equate to being a buy signal.
Indicators and Internals.
Technicals left no unfinished business. Their last indication predicted the recovery from Wednesday’s lows, which was productive, if not lackluster.
Thursday’s opportunities.
Here comes the news. The silence of practically three days without much economic indication will be broken loudly by some high-profile items, and a 30-year Treasury auction. Immediate weakness at Thursday’s open would be credible for extending down sharply through multiple sessions. In the Gotcha! setup, the selling pressure should be apparent overnight. Considering the news situation, aggressive selling that is delayed until 8:30 would still be credible. But escaping the open unscathed would mean sellers missed their chance to retake control, pointing higher, instead.[/pay]