Trading Plan for 2/13
[pay]Pattern notes.
Was it, or wasn’t it? The open’s gap down signaled a session-long decline, and its influence certainly seemed effective by converting a post-open 17-point bounce into a 20-point drop to new session lows. The last-hour’s 31-point surge, being entirely a product of the last hour, probably doesn’t have any relationship to the session-long decline signal. The signal was unbeatable, except by a move whose origin already dooms it to failure.
The last-hour surge also saved the day from trading exclusively in negative territory, recovering back to the resistance of Wednesday’s prior highs. The last-hour’s expended buying pressure might be missed just when it is needed most.
A break above prior highs Friday would therefore require fresh buying. And fresh buying would be obvious by gapping and/or spiking up. There is room up to 838’50 before buyers show they did gain traction Thursday – being a Friday, holding any opening gain could extend higher through the noon hour. Also for being a Friday, not maintaining an immediate gain would kick-start a downleg.
But no extra gain at all is required. The surge’s 836’75 high was a 61.8% swing from the 825’00 mid-day bounce high. That’s a false break measurement. Unless exceeded through a relevant timing window – e.g. Friday’s open – the next trending will be intent upon retracing back to 825’00, where there isn’t much room any lower before signaling the decline’s resumption.
Indicators and Internals.
MACD & RSI had started diverging positively into Thursday’s low. They started diverging negatively into the last-hour surge, but not until well after 3:30 when the indicators are misleading or irrelevant. The surge’s higher highs took RSI back up, but MACD was not confirming.
Friday’s opportunities.
Since the most recent price action already trended in the direction of prior highs, gapping up above prior highs won’t signal a session-long rally. And being a Friday, a session-long anything tends to print its extreme by mid-afternoon. If sellers get an early start, they might have a chance at breaking under 821’00-825’00 where the 798’00 and 792’00 targets would be reinstated. Consumer Sentiment is due at 9:55, nearly 30 minutes after the open, timing that tends often either to accelerate or to reverse any initial trending underway.[/pay]