Trading Plan for 11/9

There was no unfinished business above… and yet Tuesday afternoon’s rally extended to fresh highs. This makes the rally that much more difficult to reverse down. At least, until testing some attractions above.

Pattern points… (Setups and technicals)[pay]
Tuesday’s close above 1265.00 puts into play a test of 1278.50, assuming that 1265.00 is not rejected immediately at Wednesday’s open. Even then, that would only jeopardize a second consecutive close above 1265.00, and still allow a pullback to be absorbed.

Reversing momentum down would require first extending higher to fulfill 1278.50, and then closing back under 1265.00. That, or else immediately rejecting all of Tuesday afternoon’s rally, by gapping down back under its 1254.25 low.

Let’s point out here that Tuesday’s high being tested near the close was 1275.00. Gapping down Wednesday under Tuesday’s 1254.25 low would require 20 points of bad news. It can happen, regardless of 1278.50 being so much nearer. It’s just much less likely.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Any shallow pullback through the open — prior to testing 1278.50 and preferably also 1281.00, even if overnight — any shallower pullback holding 1262.00-1265.00 would be sponsored by weak sellers. It may still extend lower in a subsequent timing window, but it would still likely be absorbed.[/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.