Trading Plan for 11/8

If Obama had won by a landslide… then would Wednesday’s slide have been any greater? Clearly exacerbated by Eurozone headlines, Thursday may show that Wednesday was just the market throwing a hissy fit. Even then, another hissy fit Thursday afternoon would be much more substantial.

Pattern points… (Setups and technicals)[pay]
Wednesday’s close under 1397.00-1397.75 signaled a new downleg underway, targeting 1348.00. A second consecutive lower close would confirm. Closing above 1397.00-1397.75 would invalidate the breakout, but not quite signal momentum reversing up.

Oversold RSIs were left outstanding at Wednesday’s 1384.00 low to require its retest. Its retest overnight or Thursday morning without first bouncing would be more capable of holding and recovering, instead of extending down intraday. But that bullish potential would have been much likelier had Wednesday closed above 1397.00-1397.75.

Generally, the bullish scenario is that the prior two-week range is absorbing the attempt at a new downleg, and one more failed probe like Wednesday’s would trap shorts. The bearish scenario is that Wednesday morning’s probe under the prior two-week range was corrected already Wednesday afternoon, and now the decline is ready to resume.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The bearish and bullish scenarios are very similar, in that each would retest Wednesday’s low. So, immediate weakness Thursday probably would get a benefit of the doubt for extending until disproved. An immediate rally would be suspicious.[/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.