Trading Plan for 11/5
[pay]Pattern notes.
Don’t blink, you’ll miss it. Monday and Tuesday’s pattern had required a corrective bounce to being forcefully, if at all. Wednesday’s gap up was above 1044.50, and it didn’t let buyers gain traction at a critical level. So, despite extending higher intraday, the rallies were largely retraced. Several times, including in the wake of FOMC’s news.
The last downleg’s depth surprised me. It was easily a risk that 1051.00 wasn’t going to hold as support, but the morning’s 1048.00 low shouldn’t have been in jeopardy. In fact, 1041.50 was touched. That’s a lot of pessimism.
This drop filled the gap back to Tuesday’s close, and also tested Tuesday afternoon’s “lower prior highs.” Left outstanding, at least one of these two landmarks would have tried to attract price down for a retest. That attraction has now been neutralized.
The entire session essentially traded in positive territory to be “ineffectual optimism” and vulnerable to reversing down. But that late downleg might have saved the rally. Simply closing under 1051.00 Wednesday would have been far enough under session highs to mean sellers hadn’t gained traction. The late extended drop might have borrowed from future selling pressure and neutralized it.
Indicators and Internals.
All intraday divergences were satisfied by the close, leaving no unfinished business that might be due to technical extremes.
Thursday’s opportunities.
We’re getting close to Friday’s Employment Situation report. And all other jobs reports are having double impact, including how their metrics may be causing economists to tweak Friday’s expectations. Thursday’s Jobless Claims is another big number in that regard. It’s also Thursday’s only big number.
Wednesday’s futures did finish under 1048.00, and hadn’t recovered above 1044.50 at the cash session close. I’ve been discussing the floor at 1039.00, and its break would signal that sellers had regained control. Otherwise, although Wednesday’s corrective bounce fell flat, I can’t yet dismiss whether buyers will make another run at starting a corrective bounce. [/pay]