Trading Plan for 11/14
Remarkably low volume was remarkably productive… Friday’s open gapped up 15 points to 1253.00. Then the session extended 12 points higher to test 1265.00. I wonder what will happen if normalized volume were to return Monday, since Friday’s buyers held 1262.00 resistance through the close. And what will happen if volume doesn’t return?
Pattern points… (Setups and technicals)[pay]
Those are actually rhetorical questions. The rally effort’s biggest problem is not its impatience — aggressive trending can gain traction when an intraday test of resistance (or support) is exceeded through a relevant timing window. Friday’s sponsorship proved to be weak hands by failing to break through 1262.00-1265.00 resistance.
Bounces like Friday’s rally have been reacting to downlegs that are closing under relevant levels. This provides context for interpreting the bounces as being corrections — and not the other way around.
If volume does not return Monday, then would the market be immune from another downleg? Only to a specific degree. Low-volume trending can be retraced by low-volume trending. Continued low volume could retrace all of Friday’s gain back to Wednesday-Thursday’s ~1248.50 “lower prior highs.” Of course, continued low volume could also allow Friday’s rally to extend, up to 1278.50 or even to 1289.25.
All within the context of being a correction.
Meanwhile, Friday’s intraday pattern did form a setup that could point down immediately Sunday night or Monday morning. The post-open Rising Wedge in an uptrend, which resolved by surging into a plateau, can be followed by a downleg that retraces it all — and often reverses the trend’s direction. The setup’s influence will lapse after Monday’s open… Pins and needles until then.
[/pay]What’s Next… (Outlook and opportunities)[pay]
This will an interesting week. Monday’s econ calendar is empty, but the balance of the week gets very active. And this being expiration week, there is potential for a directional signal at Wednesday’s close. [/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.