Tuesday, September 11, 2007

Plan for Wednesday, Sept 12, 2007

"The general who wins a battle makes many calculations in his temple before the battle is fought."
- Sun Tzu

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ES Resistance @1481-1485, 1496-1500
ES support @1467-1471, 1436-1439

POC=1466.5 (3 day downtrend reversed, 1st day up)
Weekly pivotPoint= 1469.75

Open gap @1490
Open gap @1480
Open gap @1455
Open gap @1437

Suffice it to say that ES/SPY has been behaving unusually out of character lately. In today's session there was a below average size range (15points), the creation of a 4th unfilled gap, and no 10pt run. And I really thought that the bears would be able to take it down to test the 1435-ish level, but the bulls have responded once again. As I see things, we are back to the standoff, in the neutral zone between 1470-1480. The theme for the past two weeks (as indicated by the chart) is mean reversion - breakouts and breakdowns that are unsustained, and as a result fail.

Since there are no market moving economic reports coming out in tomorrow's session, I am anticipating more of the same mean reversion theme. Granted, today there was a continuation of yesterday's uptrend, but I don't see how it will be strong enough to overcome two gap downs - I have not noticed any significant shift in market sentiment to cause a major run-up tomorrow.
That said however, if it can sustain a move above 1485 for more than 15min, it may have enough momentum to fill the gap @1490 as well.
But if the theme of mean reversion continues to persist for tomorrow's session, then I plan to buy support and sell resistance.
Right now, in the overnight session, it seems to be drifting down towards the low end of the support zone, so if it gaps down below support to open tomorrow's session, then all bets are off and I will have to come up with a new plan.

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