Trading Plan for 2/11

There’s a whole lotta selling goin’ on… And almost as much buying. The selling is being absorbed, mostly. Buyers are gaining no traction for their efforts. Quickly absorbing any opening weakness could keep the ranging alive, perhaps even probe a new high. But it’s day-to-day now when the downleg begins.[pay]

Pattern points… (Setups and technicals)
It’s called “ineffectual pessimism.” Two consecutive sessions have gapped down, probed the prior low, and spent their entirety in negative territory – only to close back at or above the opening print.

Ineffectual optimism is potentially bullish because its sellers don’t gain traction. But buyers don’t gain traction either, so the next rally leg is a product of sellers having run out of steam. It would only refuel sellers for a bigger drop.

More often, two consecutive sessions of ineffectual pessimism are followed by a third. The third opening drop also avoids gaining traction, and often recovers, albeit usually for one last time.

This being a Friday, the morning’s bias is likely to persist through the noon hour. Also being a Friday, attempting to trend in the morning without success, could reverse into the close.

What’s Next… (Outlook and opportunities)
Early Globex reaction to Egypt’s position-jockeying kept alive Thursday afternoon’s volatility. It also remained within Thursday afternoon’s range. Trending attempts remain likely – with tests of 1306.00 below and potentially 1324.00 above – but maintaining a breakout is not likely if not started at the open.[/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.