Trading Plan for 11/26
[pay]Pattern notes.
The last relevant price action Tuesday was the failure to close above ESz 858’00-859’00. Despite having traded about 6 points above this threshold only minutes earlier, the close was about 6 points below it.
The Globex session extended down through most of the night before bouncing. A negative divergence ended the bounce with a 15-point drop to lower lows at 840’00. A bounce from here has room up to 845’00 (being tested at this moment) without giving buyers enough traction to avoid another downleg targeting 832’75. This next target is interesting because it is under yesterday’s low. Gapping open under yesterday’s low would reject yesterday afternoon’s rally. And it would signal a session-long decline.
If sellers were going to make a splash before Thanksgiving, they needed to do so by early Tuesday afternoon, or no later than this morning’s open under special circumstances. Sellers did produce lower lows into mid-afternoon Tuesday and prevented a bullish close. Gapping open under 840’00 would give sellers a window to extend the overnight loss. A break maintained under 836’00 would give sellers a day to retrace all of Monday’s gains, perhaps more.
CAVEAT: The foregoing would be much more reliable in a normal market environment. I am impressed by the predictability of behavior overnight (specifics available in the chartroom), but liquidity is going to start evaporating rapidly in several hours. If sellers aren’t clearly influential through the cash session’s first hour, then the balance of the day will be much less likely to honor any other normal influences.
Indicators and Internals.
Divergences at the overnight bounce’s high produced new overnight lows. The 1-minute RSI diverged positively upon approaching the new lows. That hasn’t bled into the 3-minute after 30 minutes of bouncing 5 points, so the low should at least be retested. Unless there is simultaneous divergence there, another downleg would be underway.
Wednesday’s opportunities.
It’s quite an economic calendar planned for today. Three reports are due at 8:30, another at 9:45, two more at 10:00 – and all of them high-profile. If the market wants to fall, then it should be able to find a scapegoat. So easily, that if the reports come and go while S&Ps remain within yesterday’s range, selling could very well be marginalized for the day. Beware of illiquidity as noon approaches.[/pay]