Trading Plan for 11/28

If last week’s rally was a corrective bounce… then how much time is allowed before not yet falling makes the bounce likelier to extend higher? Not much more, since Tuesday’s ranging nonetheless did try trending repeatedly.

Pattern points… (Setups and technicals)[pay]
Monday’s second consecutive close above 1397.00-1397.75 reflected enough strong-handed buyers to require a new distribution pattern to form if momentum were going to reverse down. Reversing down immediately would not have been credible. Similarly, failing to close positive Monday above Friday’s close required a new accumulation pattern to form if the rally wanted to extend higher.

So, Tuesday tested Friday’s 1406.75 cash session close as resistance. It was tested twice intraday, not counting the overnight retest of Friday’s 1407.50 high. And Tuesday tested 1397.00-1397.75 as support — also twice.

Third time was a charm, sort of. Tuesday’s last 90 minutes were spent chipping away at 1397.00-1397.75 support. A last-minute dip probed fresh lows down to 1395.50. Actually, that was a second-to-last minute dip. The last minute actually reacted back up into the range to avoid a hold-short setup.

So, Tuesday did range, it did continue forming a pattern, and it did restrain trending attempts. The burden of proof is on buyers much more than on sellers, although neither has gained traction for a breakout.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping up Wednesday above Tuesday afternoon’s 1405.25 high would trigger a session-long rally setup. Working higher through the morning to break above 1405.25 at a later relevant timing window would also be a credible breakout. But maintaining almost any immediate weakness through the open under 1395.50 would be likely to trend down, potentially targeting new lows.[/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.