Trading Plan for 11/3

It’s all over but the waiting. And then more waiting, as election results take a back seat to anticipation ahead of the FOMC statement. Two of the most impacting, high-profile news items, coming on the same day, and widely telegraphed in advance. [pay]

Pattern points… (Setups and technicals)
Tuesday’s gap up to 1190.00 was the first in some time not to be retraced relatively early. In fact, a corrective dip to 1186.25 was recovered into and out of the noon hour. And it extended to new session highs that afternoon.

That afternoon’s high touched last week’s 1193.00 high. A no-bias environment at the time prevented trending higher. Nothing that a drop back down to 1189.50 couldn’t off-set. Sellers weren’t likely to gain traction after only touching the week-old high.

Similar to Monday’s close above 1179.50, closing Tuesday above 1191.50 would have ensured an opening rally Wednesday. Tuesday’s cash session ended at 1190.00, but futures closed at 1192.75.

What’s Next… (Outlook and opportunities)
Regardless, last week’s 1193.00 high is likely to be probed intraday before sellers could gain traction for another downleg. Resistance at 1195.00-1196.00 could be a problem if an early probe were rejected back under Tuesday’s highs. And sellers would gain traction if new highs were rejected back under 1189.00-1190.00.

Two of the most impacting, high-profile news items, coming on the same day, and widely telegraphed in advance. There’s not much room for a positive surprise, but there should still be some follow-through buying while the news meets expectations.

A downleg that doesn’t first probe new highs intraday requires a degree of selling that would have to be underway well before the open. A downleg triggered by the FOMC news would be much likelier if a probe of new highs had already fallen back into negative territory. [/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.