Trading Plan for 11/15
If they circled the wagons around Big Bird… then what are the chances of “compromise” to avoid the fiscal cliff? PBS funding was questioned during the campaign. It is worth hundreds of millions of dollars. Clearly, Big Bird can stand on his own two feet. So can Barney, even without support from his tail. If they can’t be bothered to do with less taxpayer funding, then no other big decisions are likely.
None of which should be surprising, and yet the market tumbled anyway Wednesday afternoon on the President’s uncompromising posture. No doubt the potential ramifications of Gaza shelling spooked the market, too. But sharply probing new lows on either of these developments suggests there’s more brewing.
Pattern points… (Setups and technicals)[pay]
Wednesday’s drop trended down throughout the day. It hesitated or bottomed at targeted supports, i.e. the pattern’s distributive objectives. The morning’s 1362.25 low was 2 ticks under its bias-down target. The afternoon’s 1349.50 was 4 ticks under its 1350.50 target.
Recall that 1348.00 was the objective put into play by last Wednesday’s break under 1397.00-1397.75. Room for noise under 1350.50 down to 1348.00 can be tested before signaling the decline is extending. Extending the decline would next target 1324.00.
Meanwhile, there is potential to bounce. Having held a test of 1350.50, no lower objective was put into play. That doesn’t preclude the drop from extending without delay, but it cautions against holding-short overnight. It also argues for buying a bounce that is recovering from a fresh low (presumably down to 1348.00) whose RSIs diverged positively.
[/pay]What’s Next… (Outlook and opportunities)[pay]
The Wednesday Expiration Indicator triggered an actively bearish signal. That speaks to the bias into and out of the weekend Friday afternoon and Monday morning. Big breaks like this past week can extend in the interim anyway. Regardless of an interim bounce, expectations are for expiration to be bearish. [/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.