Trading Plan for 11/14

If Monday night’s drop couldn’t resume the decline… then Tuesday afternoon’s attempt can’t tolerate another detour. Testing and retesting Monday’s low-volume low should have chipped away at its support, unless its support intends to launch a bigger bounce.

Pattern points… (Setups and technicals)[pay]
Tuesday’s pre-open drop down to 1365.75 came close to Friday morning’s 1363.50 “new Globex trend extreme.” Close enough to all but assure its test. Having probed under Monday’s 1373.00 low, recovering back above Monday’s 1381.50 high could have launched a multi-session detour. But 1381.00‘s recovery failed, and so did Monday’s 1373.00 support.

Detouring on the way to an objective generally indicates that the objective won’t hold its test. So, bouncing 20 points from 1365.75 instead of extending down another 3 points reflects optimism. Rejecting the detour reflects ineffectual optimism. That refuels the decline, making it likelier to extend.

And just like Tuesday afternoon’s break was likely to be deep and steep, extending down Wednesday morning should also be deep and steep. Tuesday afternoon’s extension measured 7 points down to 1372.00. Wednesday’s extension should essentially measure 21 points down to 1350.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The drop can be circumvented in a couple of ways. First would be to recover above Tuesday afternoon’s “higher prior lows” at 1379.00. There is that much room to absorb buying pressure without sellers losing traction. Second would be to gap up above Tuesday afternoon’s 1384.00 high. Rejecting Tuesday’s closing downtrend would trigger a session-long rally.[/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.