Trading Plan for 12/1
[pay]Pattern notes.
It’s easy making lemonade from lemons, but not without the lemons. Sellers were marginalized by failing to gap down under 1086.00. It was tested into the noon hour, but that was the wrong timing to gain traction. Monday was an “inside day” contained within Friday’s range, and no support was broken.
Buyers didn’t accomplish anything either. They can’t even claim to have prevented the decline’s resumption – that was sellers’ fault (as described above). Gradually rising bottoms through the afternoon did finally trigger a squeeze from 1088.00 back up to the morning’s 1096.50 high. But the morning’s high held as resistance, so buyers gained no traction for their efforts.
1095.00 held tests again as resistance. When the squeeze didn’t stick, the last half-hour’s gain was retraced entirely back down to 1092.00, and out of position to easily re-try Sunday night’s rally attempt. As with Friday’s close, a rally can still be attempted, but probably not a durable one, not originating from under 1095.00.
No lemons, no lemonade. Somehow this still manages to taste like lemons anyway. Trending is difficult to start from a standing stop, or from low liquidity. Monday’s participation was no doubt impaired by more than a few four-day holiday weekends. That won’t be a factor Tuesday, making early volatility likely.
Indicators and Internals.
RSIs accompnaying the afternoon’s highs were overbought, but they were lower highs that don’t offer any pullback protection. Positive divergences at the morning’s low indicated that the selling pressure had ended. There is no unfinished technical business.
Tuesday’s opportunities.
Monday’s morning and afternoon highs each touched 1096.50. The interim consolidation was sloped upward Sellers start gaining traction in this pattern under 1090.00, and extending under 1086.00 would target 1078.75. Buyers would start gaining tentative traction back above 1095.50, probably targeting 1101.00, but possibly no more than 998.50, or less. A lifeless open is already unlikely due to increased participation. That’s all but assured by three econ reports coming simultaneously 30 minutes after the open, at least two of which are high-profile.[/pay]