Trading Plan for 11/8

1218.75-1220.25 was the target triggered by Wednesday’s last-minute breakout. And got quite the workout Thursday’s and Friday. Was it absorbing the rally’s momentum, or conserving it to resume Monday? [pay]

Pattern points… (Setups and technicals)
Targets reflect where buying (or selling) pressure is satisfied. Exceeding the target means new sponsorship has arrived to extend the target. Failing in attempts to exceed the target means no new sponsorship arrived.

The 1218.75-1220.25 target’s lower-end was Thursday’s last-minute high. It was essentially Friday’s opening print. And this was after being probed up to 1222.25 by the Employment Situation report’s reaction. Either 1218.75 or 1220.25 was being tested at every relevant timing window Friday. And it was tested repeatedly as support intraday.

And its support was still being tested until the last 15 minutes. A break lower would have been very productive, but sellers lacked sponsorship. Weak sponsorship is exploited at the next open when pent-up selling pressure is not triggered by the close. But Friday’s session couldn’t wait, and a short-squeeze already neutralized the opportunity.

The squeeze stopped short of gaining traction. Closing under the morning’s high is indistinguishable from noise. Its peak touched the 61.8% measurement of the afternoon’s swing, which a breakout would have exceeded. RSIs barely became overbought, only to diverge negatively before the close.

What’s Next… (Outlook and opportunities)
Despite all that Friday’s buyers lacked, sellers never gained traction. The rally can extend into this week. But it requires avoiding an early dip, even a dip from fresh highs.

Friday’s last-minute action trended up, and the afternoon’s low printed before the last hour. So, gapping down under Friday’s 1217.50 lows would trigger a “session-long decline” setup. Reacting down from a fresh high (i.e. 1228.25) after the open could also gain traction to trend down. Either setup could last through Wednesday morning.

Avoiding or absorbing early weakness might not extend higher immediately, but it would make higher targets likely. Above 1228.25 would next target 1233.00 and then a 2-point range around 1240.50.[/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.