Trading Plan for 11/23
Did Monday’s session dodge another bullet? It looks more like it took a hit, and it’s trying to make another run for it anyway. But the intraday drop did damage the chart, whose patterns had already suggested rally efforts would fail.[pay]
Pattern points… (Setups and technicals)
It’s always interesting how the character of an expiration’s session is duplicated on the following Monday. For example, Friday’s gap down created a lot of room to absorb a 12-point rally without letting buyers gain traction for their efforts. Similarly, Monday’s drop into the noon hour’s low absorbed the afternoon’s 14-point rally back to the morning’s high.
Also similar to Friday, Monday’s buying pressure wasn’t entirely wasted. It did prevent sellers from gaining traction. The likely probe above Friday’s highs Sunday night was rejected before Monday’s open. A probe above Monday’s 1198.00 high (same thing, really) might last a little longer, and could probe Sunday night’s 1206.00 high.
The last similarity to Friday is that its 1198.00 high is still a valid candidate for launching a new downleg. Monday’s RSIs left no unfinished business above. Oversold RSIs at Monday’s 1182.50 low require its eventual retest. So does the gap back to Wednesday’s 1177.50 close, which had confirmed the trend is down. And the downtrend likely will have resumed if Tuesday’s open isn’t extending the corrective bounce.
What’s Next… (Outlook and opportunities)
Third time is rarely a charm in the market. So, Friday and Monday’s two morning drops aren’t likely to be followed by a third on Tuesday. Not unless a substantial drop is underway. Otherwise, a retest of Sunday night’s range is likely, targeting 1204.00.
Successfully negotiating 1204.00 – whether overnight or Tuesday morning – would next target 1208.50 and potentially 1212.00. A lot of econ reports are being squeezed into Tuesday and Wednesday ahead of Thanksgiving’s abbreviated hours. There is plenty of opportunity for reversing or accelerating any intraday trending. [/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.