Trading Plan for 11/5

If the cash premium to futures remains this wide for another session… then it will tie a record. Its 5.25 point premium already has been maintained for an unusually long period. Typically, that static is released by a sudden injection of volatility.

Pattern points… (Setups and technicals)[pay]
Monday’s session advanced toward last Wednesday’s 1772.25 “new Globex trend extreme” that requires being retested intraday. Buyers gained traction by closing above the morning, bias environment and noon hour highs at 1763.50. And they left “unfinished business below” at the morning’s 1752.75 bias-down signal.

Neutralizing 1752.75 first would have been bullish. It represents a 61.8% retracement back to Friday’s low. Retesting the highs from there would have found buyers refueled and able to extend higher.

Instead, 1752.75‘s test is left outstanding. And if Tuesday’s open were to gap up as suggested by Monday’s buyers having gained traction, then the gap back to Monday’s close would become “unfinished business below,” too. So, Monday’s bullish bravado — especially if repeated at Tuesday’s open — could be the rally’s undoing, for extending higher prematurely.

There is resistance at Wednesday’s 1769.50 opening gap whose test could intervene to further delay retesting the actual high. Retesting the actual high would be likely to visit 1774.50 in the process. All of which assumes that Monday’s high does actually extend higher. Back under 1756.00-1757.00 again would have only one chance to recover from 1752.75, or else extend down sharply.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget about this week’s truncated schedule. Market Tours will be missed on Wednesday and Thursday — with Wednesday being unattended entirely (a small chance of being available during the final hour and Market Wrap). [/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.