Trading Plan for 11/5

[pay]Pattern notes.
The afternoon dip’s recovery triggered a pattern that was likely to trend up into the close. That’s essentially how the session played out, with a 21-point last-hour rally to new relative highs within 1 tick of ESz 1007’00. There was still time for a 10-point dip to fully recover.

The close was under the morning’s high, signaling that buyers didn’t gain any traction on the afternoon recovery. That doesn’t mean the rally can’t resume without delay, but it must maintain higher highs through Wednesday’s first 45-60 minutes. Failing instead to maintain the open’s probe of new highs would all but seal a top. It should be obvious by 10:15 that momentum had reversed down.

New highs can be avoided. Not easily. The last hour’s 21-point rally would need to be invalidated, by gapping under its 985’50 origin. This would put into play the gap back to Monday’s 970’00 close, for starters. Otherwise, a near-term peak would depend upon early buyers quickly disappearing after probing higher highs in the 1011’00-1012’50 area.

Indicators and Internals.
Both 1-minute and 3-minute MACD & RSI diverged negatively simultaneously as the last-hour’s high was retested. This doesn’t preclude higher prices, but it makes immediate higher prices likely to form a peak. If the first reaction is instead a drop back down to 990’00-991’00, then the rally would likely resume – not just retest Tuesday’s high, but resume in a new upleg.

Wednesday’s opportunities.
A couple of report before the open are followed by another at 10:00. After the overnight reaction and the immediate open, election-related price action should be limited past the open.[/pay]