Trading Plan for 2/11

[pay]Pattern notes.
A recovery above 830’00 would have confirmed a short-squeeze underway. Instead lower lows printed down to 820’75. Buyers missed another opportunity by failing to control the 3:20-3:30 window. Their opportunity for a short-squeeze wasn’t exploited. More so, it was torn to shreds, defiled in unmentionable ways, and then spoken to unkindly.

Avoiding a recovery through 3:45 meant that the decline would persist into Wednesday’s session, so the balance of the session bounced for sellers to catch their breath. A close above 828’00 would have caught sellers unaware, but it held. Yet another missed opportunity. Whether buyers are unmotivated or scared, they aren’t accumulating – even as Tuesday’s repeated probes of lower lows failed to extend down.

An overnight intervention might have some immediate, optimistic, counter-trend effect. But I would expect it ultimately to resolve down. The drop underway is attracted to 811’25 and 790’50, while targeting 785’25 on the way back to and through November’s lows.

Indicators and Internals.
Tuesday’s repeated positive divergences among 3-minute indicators each produced its own bounce. But no bounce recovered a prior high before falling to a new relative low. Three consecutive such positive divergences were ignored, suggesting the market is aware of much bigger selling pressure coming down the pipeline. That would be scary because the result tends to fall at a steeper slope and to a deeper degree than the leg that preceded the ignored positive divergences. And the preceding leg was the 30-point, 45-minute plunge into and out of the Treasury secretary’s speech Tuesday.

Wednesday’s opportunities.
The econ calendar is pretty thin. Back above 830’00 might reach 832’50 or 836’50 overnight just as noise. The 840’00 area’s recovery would suggest that sellers are being absorbed and overcome. A break under 824’25 would start to signal that the decline was already resuming. [/pay]