Trading Plan for 11/2

It sentiment just before an event is contrary… then Thursday’s restrained optimism suggests the market is eager to break sharply higher. Its post-close surge was temporary, but illustrated the pent-up buying pressure. The trick now is in greeting the report from within or above Thursday afternoon’s range.

Pattern points… (Setups and technicals)[pay]
Thursday morning’s optimistic surge was barely retraced intraday. That wasn’t due to “ineffectual optimism” spinning its wheels just to stay in place. It was more of  a restrained optimism, even pessimism — pessimism atop a 26-1./2 point rally from overnight lows.

Weak-handed buyers never probed fresh highs intraday that would have exposed them to being rejected, and trapped. Meanwhile, anxiousness ahead of Friday’s Employment Situation report failed to produce more than a temporary last-hour dip. That’s strength, Gary Cooper style.

That strength assumes the report will not be greeted from under Thursday afternoon’s 1419.00 lows.Thursday’s post-close surge up to 1425.00 apparently assumed that, as well.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Speaking of 1425.00, we’re not yet out of the woods, there being one more “higher prior low” of significance above at 1425.25. Its recovery would target 1431.00-1433.00. This being a Friday with the illiquid weekend fast- approaching, and the second day of a breakout, and 8-9 point rally seems weak. Rallying at all could be big — to 1443.00 or 1450.00 — if at all. Back under 1419.00 could target new lows under 1400.00.[/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.