Trading Plan for 11/18
[pay]Pattern notes.
The problem with frustrating environments – frustration from any source – is that it can affect perception. I never want to expose myself to the market or to you under those circumstances. (A bad automatic Windows update appears to have been the cause of Friday’s back-up machine problem, which was fixed when the system was rolled back to pre-update.)
I would like to think that had the technical difficulty du jour not driven me from all things technological then I would have happily sold the last hour’s drop. A significant warning flag had already appeared 45 minutes earlier when MACD & RSI began diverging negatively on two probes above ESz 900’00. The morning’s 907’00 high was likely to be retested regardless of its resolution. And any new high would have left no unfinished business to attract price higher since 911’00 would serve well on a closing basis.
Technicals deteriorated at Friday’s last-hour high. The last hour’s high was also a probe above Thursday’s high. The 3:20-3:30 window was a successful effort to fall back under those highs. A test of the original decline’s 890’00 target held price tightly until the session’s last several minutes plunged into the last tick. S&Ps lost an additional 11 points down to 860’00 from the cash session close.
That last metric is relevant because it might have signaled a retest underway of Thursday’s “V” bottom. The session’s 868’00 close wasn’t attacked until the cash session close, and it wasn’t broken until afterwards. The difference defines whether momentum has already reversed down. The burden of proof is on sellers, so not extending down at Monday’s open (or Sunday night) could default to being bullish. Otherwise, Thursday’s recovery will have already proved itself a bear market rally, with new lows in-play.
Indicators and Internals.
Friday’s last RSI readings were all substantially oversold. That is often useful for timing a bounce intraday. But ending the day so committed tends to extend in that direction when trading resumes. The Friday Factor was mixed since the open’s first 15 minutes of trading firmed from its gap down, and the last 15 minutes only slid, so no specific resolution is required.
Monday’s opportunities.
A bounce has room up to 878’50 before buyers start gaining traction for at least a test of 892’00. There is room down to 851’00 without yet requiring much more weakness intraday, but any lower would next target Thursday’s 816’75 low, and potentially much deeper.[/pay]