Trading Plan for 12/1

Still close, and still no cigar… Monday afternoon’s false breakout was rejected overnight. Tuesday’s retry was rejected through the close. Can sellers do any better for themselves probing fresh lows? [pay]

Pattern points… (Setups and technicals)
Another day, another test of the 1175.00 area. It’s obviously relevant support. But if it were productive support, then Tuesday’s recovery attempt should have gained traction. Returning to 1175.00 after the close only serves to chip away at its support.

At least Tuesday’s last-minute plunge released a lot of pent-up selling pressure. It would have been more powerful if left to simmer overnight. Some follow-through is still likely, but selling pressure could be satisfied much more easily upon probing recent lows.

Immediately rallying at Wednesday’s open would not be credible. Buyers didn’t gain traction Tuesday, so they’re unlikely to clear the first obstacle, like prior highs around 1188.00. Of course, gapping up above prior highs would get a benefit of the doubt for being able to extend higher.

What’s Next… (Outlook and opportunities)
Since timing the corrective rally’s end last week between Wednesday’s close and Friday’s open, every bounce has failed at resistance. Tests of support have held, but they haven’t reversed the trend up, so sellers don’t seem to be done.

A capitulation sell-off that recovers from testing 1171.00 would seal a bottom to this downleg triggered three weeks ago at 1215.00. Probing 1171.00 without recovering would signal a new and more powerful downleg has begun. [/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.