Trading Plan for 11/5

If the recent basing isn’t launching a durable rally… then Thursday’s rally into Friday’s open only stretched back the rubber band. And Friday’s reversal down has let it start snapping back down.

Pattern points… (Setups and technicals)[pay]
It shouldn’t have been that difficult. Friday’s open needed only to recover fresh highs above the 1425.25 bias-up signal to then target 1430.50. Recovering 1430.50 through the bias timing window would have targeted up to 1450.00. In fact, 1430.50 was being probed already by 1 point before the open.

But it was another case of too much, too soon. Natural resistance upon filling a two-week old gap proved resilient, and pushed price back down.

Rejecting both bias-up parameters through 10:15 targeted both bias-down parameters at 1419.00 and 1413.00. The cash session reached 1407.75 and futures extended to 1405.00. That’s a 50% retracement back into the past week’s range. A 38.2% or 61.8% retracement would be normal, so Friday’s retracement was too deep to be deep enough.

Closing the cash session under 1409.00 would have been compelling to hold-short through the close. But it was still being tested then, and not clearly broken. Extending further down into the futures close only expended some of the pent-up selling pressure that a gap down would depend on. Yet, not immediately recovering Monday could see a new downleg underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
How long has it been since we’ve had a Saturday Strategy Session? On a Saturday? Last Monday’s special session doesn’t count. Anyway, this weekend’s is at its normal 9:30am ET starting time. See you there.[/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.