Trading Plan for 11/19
[pay]Pattern notes.
You’ve heard “two wrongs don’t make a right”? Well, two ineffectual pessimisms don’t make effective optimism. But it might seem like it for awhile.
Wednesday was the second consecutive session spent largely probing lower lows, without sellers gaining traction for their efforts. In both cases, the intraday price action ended with buyers reasserting themselves. All that meant for Tuesday night was brief follow-through to the unmet intraday targets. Wednesday night doesn’t have that luxury, since no upside targets were established intraday.
It’s still sellers that have had – and flubbed – more opportunities to gain traction. It’s still buyers that have yet to benefit from Monday’s equilibrium close at the rally ‘s next target. But now it is sellers that have chipped away at their own support, while buyers haven’t chipped away at their resistance.
This means that if a rally is finally attempted Thursday, regardless of whether it is retraced intraday, it is likely to be false. And a rally is likely to be attempted – likelier, following another session of ineffectual pessimism. A gap down under all of the past two sessions’ lows, essentially under 1101.00 would give sellers control. Otherwise, Monday’s 1112.00 high should be broken at Thursday’s open on the way to 1115.00 and 1118.00.
The 1105.00-1107.00 area’s attraction and Friday’s impending expiration can be counted on to try interrupting the flow, so keep this in mind when establishing positions and their stops.
Indicators and Internals.
1-minute RSI was curiously indifferent to Wednesday’s late rally. The buying pressure is no more or less valid for it, but there is no unfinished business, either.
Thursday’s opportunities.
Thursday’s session should be the session that Wednesday’s session was not. A gap up that attracts buyers, extends higher, and then becomes vulnerable both to peaking and to reversing down. As much time as has been spent ranging sideways, and with Friday’s expiration wildcard only getting wilder, I’m not concerned with a reversal’s timing. But closing at a new relative high would make a reversal down more difficult on Friday. Watch the econ calendar, which has a steady flow of high-profile items through the open. [/pay]