Trading Plan for 12/1

[pay]Pattern notes.
Friday’s session repeated Wednesday night and Thursday’s action, trying in vain to probe Wednesday’s highs. The repeated probes eventually chipped away at resistance, breaking higher after 11:30. This would have been very relevant on a normal day with normal timing windows . But Friday’s half-session contained only one timing window, at the open, during which buyers attempted and failed to take control.

That doesn’t necessarily preclude price from gaining further, it just makes further price gains increasingly likely to fail. Friday afternoon’s probe reached 897’00 into the close, and the same trending attempt has room up to 905’00 and 910’50 simply as noise expansion. Any higher would start to signal that the trending might be inflating into a year-end rally, albeit ultimately untenable.

The rally attempt is already vulnerable to peaking. An immediate break back under 885’25 could quickly slide another 20 points to 865’00, then another 15-20 points lower still. And that’s just to correct the upleg from Wednesday morning’s low, hardly a ripple compared to the entire upleg from the prior week’s new low. None of which would matter in the near-term if sellers don’t retake control at Monday’s open.

Indicators and Internals.
There was no particular technical weakness at Friday’s close as S&Ps were probing new relative highs. Modest opening weakness would not be credible for extending down further. The nearby chart shows that technicals at the recent low do not argue that a bottom formed, since divergence was limited and not even a positive divergence.

Monday’s opportunities.
Two econ reports are scheduled for 10:00am. Any initial trending attempt would be vulnerable to reversal. So, whether rallying or pulling back, the news should either reverse or accelerate the initial trending attempt. After two consecutive days of trending up on less liquidity, and a week of gains in a bear market, trading one or two opportunities are likely before dawn.[/pay]