Trading Plan for 11/17
[pay]Pattern notes.
Monday’s first 15 minutes of volatility were all about extending through prior highs. Pre-open gains had probed both Friday and Thursday’s highs, pinning a rally’s hopes on extending forcefully through both (or patiently holding above one). And forceful it was, until piercing the 1105.00-1107.00 target.
The balance of the session ranged flat to higher, up to 1112.25. There were two exceptions: a noon hour dip whose timing helped to absorb it, and then a last-hour dive down to 1103.25. The last-hour dive was nearly a killer, because it had threatened to close back under the 1105.00-1107.00 target. This would have trapped all of the buyers since the open’s first 15 minutes of volatility.
While a close under 1105.00-1107.00 was avoided, the close was not above it. Sellers didn’t exploit the afternoon’s drop in any durable way. But buyers failed to exploit their own opening gain, or almost an entire session of hovering above the opening surge’s peak. That’s all interesting, but holding the 1105.00-1107.00 target makes it “equilibrium.”
For at least one day, usually two days and sometimes three, trending through the morning is likely to retrace entirely in the afternoon. And that retracement is likely to extend somewhat equally in the opposite direction. Typically there is at least one more move back to the 1105.00-1107.00 equilibrium, and possibly another round-trip.
The first trending attempt often seems very valid, and very productive. Until it isn’t. If this is not equilibrium, then the the morning’s trending won’t retrace. That possibility isn’t relevant until the noon hour, and we’ll look at it then.
Indicators and Internals.
The high’s negative divergence was clearly influential, and it was also fulfilled. Two positive divergences on the way down didn’t end the selling until the 3-minute RSI made a higher low. No unfinished business was left outstanding at the close.
Tuesday’s opportunities.
There is a steady flow of econ reports through the morning. This market has been doing better with news than without it, a pattern that would point higher, first. A retest of Monday’s high up to 1015.00 would be a likely candidate for the rally suddenly losing sponsorship. An initial drop would find support at 1099.00.[/pay]