Trading Plan for 11/20

[pay]Pattern notes.
The equilibrium at 1105.00-1107.00 gave us two failed trending attempts. Both tried trending down, and both tries were retraced. There was no rally attempt, which was likely but not required. Still, the next one should have been up. Its resolution would have been down anyway, after probing Monday’s 1112.00 high by at least 3 points.

Thursday’s gap down under 1101.00 was the only way to break free from the equilibrium. It was being presumed throughout the week that 1105.00-1107.00 was a major target. That has moved from opinion to fact.

Does that prevent probing Monday’s high before the next downleg gets underway? Perhaps Tuesday and Wednesday’s ineffectual pessimism were the next best thing to a failed rally. My templates don’t allow for it, but this would leave no unfinished business above, such as a retest of Monday’s 1112.00 high. Its business may be unfinished, but it’s not serious enough to prevent the next downleg. Still, filling the gap back to Wednesday’s 1108.00 close would have to include a retest of 1112.00.

Perhaps a rally attempt was subverted by expiration’s influences. Those same influences could also subvert a retest of Thursday’s 1086.50 low. Its retest is likelier than the retest of Monday’s high, because Thursday’s open signaled a session-long decline. The last hour should have printed new session lows. When it doesn’t – unless Thursday’s session is proved to have been an anomaly – the next session tends to get that done quickly.

Indicators and Internals.
A positive divergence at Thursday morning’s low identified the session bottom. Its product was a little slow in extending. Very slow, and hardly extended considering all the time available. So it is interesting that RSIs left no unfinished business above to inhibit a decline.

Friday’s opportunities.
A bounce could have probed 1094.00 by up to 1 point if it intended to refuel sellers for retesting Thursday’s low. The bounce did probe 1094.00 by 1 point, but too late for refueled sellers to reverse down. That could happen overnight, or be well on its way. Fresh lows that recover above 1087.00-1088.00 through the open would end the downleg. Only attacking the lows and not recovering 1087.00-1088.00 would point down sharply through the morning.

To prove that Thursday’s drop was an anomaly, Friday’s open must gap up and recover 1101.00-1103.00. That’s no small feat, and all the less likely on expiration. A flat or mostly unchanged open and narrowly ranging day would be a normal expiration. A volatile open should prevent that.[/pay]