Trading Plan for 11/9

1218.75-1220.25 was the target triggered by Wednesday’s last-minute breakout. It got quite the workout Friday, and now also Monday. Friday’s testing wasn’t bullish, but Monday’s sellers couldn’t exploit it. Unless Tuesday’s open tries gapping down again, at least a probe of higher highs is likely.[pay]

Pattern points… (Setups and technicals)
Monday’s open gapped down, probed prior lows, and spent the entire session in negative territory. That’s pessimism. Prior lows held as support, making it “ineffectual pessimism.”

The session’s pent-up selling pressure was never triggered. Leaving it overnight turns it into buying pressure. That pressure should be evident at the open. Resistance at Friday’s 1224.50 high would be only obligatory, and temporary, unless its overnight test were being rejected at Tuesday’s open. Breaking higher would target 1228.25 and potentially the 1240.00 area.

Monday’s ineffectual pessimism does leave the door open to its opening sell-off attempt getting a second chance. But 1118.75 must be broken decisively. Its magnetic attraction has already been thoroughly vetted – orange dots on the nearby chart identify 1118.75‘s tests at almost every relevant timing window Monday. A valid second chance must gap down or immediately break under Monday’s ~1215.00 lows to gain traction.

What’s Next… (Outlook and opportunities)
Gapping down just a little Tuesday won’t be gapping down enough for sellers to retry Monday’s opening attempt. And gapping down just a little would suggest more narrow ranging throughout the morning.

An overnight break above 1221.50 would be likely to retest Friday’s 1224.50 high overnight. Its test could be rejected by Tuesday’s open Breaking under 1217.25 first would trigger a morning dip. Its purpose would be to refuel buyers for a break above 1224.50. [/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.