Trading Plan for 11/30

Close, but no cigar… That was quite a surge Monday afternoon. And it might yet gain traction for a multi-day rally. But it stopped just short of assuring any follow-through. And stopping just short leaves the pattern vulnerable to resuming the decline at Tuesday’s open.[pay]

Pattern points… (Setups and technicals)
Monday’s afternoon’s rally from 1178.00 started several minutes before the afternoon’s bias environment started lapsing at 2:30. And it surged. It was sponsored by impatient buyers. A rally that started slowly would have been durable, or a surge that started later. But not an impatient surge.

In fact, the surge’s only hesitation was a Running Correction. It resolved up appropriately into the rally’s final segment. And the final segment’s retracement stopped 1 tick short of touching the Running Correction’s high instead of probing it – more excessive optimism, how appropriate.

The rally’s excessive optimism could have redeemed itself by peaking earlier. But that wasn’t going to happen with a premature surge. So the rally’s test of 1188.00 held as resistance to rob buyers of their traction, or instead of avoiding a test so it could attract price higher Tuesday.

And the rally could have prolonged itself by retracing some of the breakout leg. But none of it was retraced back to the Triangle where it originated. And that is required whether or not the breakout resumes.

What’s Next… (Outlook and opportunities)
Rallies that don’t gain traction by the close can extend higher only by gapping up. Gapping up Tuesday above 1193.00 would make the rally credible for extending higher another day. Assuming it lasted the day, it could eventually probe new highs above 1225.00.

But a break back under 1182.00 or 1178.00 through any relevant timing window would resume the decline from Thursday’s high. Oversold RSIs at Monday’s 1172.25 high require a retest eventually, presumably including a visit to 1171.00, and now also to 1166.50 to compensate for the delay.[/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.