Trading Plan for 11/12

If not for Monday’s holiday liquidity constraints… then would its hovering at trend highs have launched an upleg into uncharted territory? That’s doubtful, since Friday’s rally probably would have been shallower if the weekend’s illiquidity were not going to be compounded by Monday’s holiday. In other words, the market is where it should have been. Or, at least, it will be where it should should have been, after Tuesday’s opening action.

Pattern points… (Setups and technicals)[pay]
A narrowing range like Monday’s often reflects indecision. When it does break, it is likely to break falsely and then reverse more substantially in the opposite direction. That’s all intraday. Monday’s narrowing range avoided even a false trending attempt through the close.

An initial trending attempt Monday night or Tuesday can still be false, but it can extend much more substantially before it is reversed in the opposite direct. Initial trending attempts that are delayed beyond the close can gap, i.e. explode at the following open.

There is a growing attraction to retest last Thursday’s 1774.50 pre-open high, presumably including 1777.75. Neither requires a retest, but not yet reversing Friday’s bounce makes it increasingly likelier to extend. The path up can be down, first, to 1760.00 or 1753.00 Extending any lower would suggest the delay in reversing Friday’s bounce was only a delayed reaction due to Monday’s slower volume.

[/pay]What’s Next… (Outlook and opportunities)[pay]
In the absence of a weekend Saturday Strategy Session, the post-close Market Wrap on Monday included a discussion of the bigger picture. Its recording is located in both spots, each linked from the blog’s sidebar.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.