Trading Plan for 12/10

Bullishness comes in different flavors… Wednesday’s night’s rally to new highs is one flavor. More meaningful is Thursday morning’s recover from two dives into negative territory. None of which is relevant if not triggered.[pay]

Pattern points… (Setups and technicals)
The attraction back up to Wednesday night’s 1233.00 “new Globex trend extreme” was mitigated somewhat, but not entirely. The pre-open retracement to 1230.50 could serve by proxy as if the high were retested. But Thursday’s close was still within the high’s orbit.

This doesn’t change that price action since fulfilling the 1223.00 target (basis Mar, was 1228.00 basis Dec) has been distributive. This is not accumulation. That said, I am not ready to turn bearish.

I would get bearish on a gap down Friday or a sharply lower break, anything that ignores the attraction higher to trend down. There have been 2-3 opportunities for downlegs ignored: Wednesday afternoon, Thursday’s open, and late-morning Thursday’. When sellers do retake control, it should be with a vengeance.

Otherwise, only weakening meekly is unlikely to gain traction. Thursday morning already absorbed two probes back into Wednesday’s range (circled red), which is accumulation. The gaps back to Wednesday’s closes were filled (highlighted red), neutralizing their attraction down. And RSIs were overbought at the close (circled green), requiring any dip to recover.
What’s Next… (Outlook and opportunities)
This being a Friday, the morning’s bias signal is likely to persist through the noon hour. Overbought RSIs at Thursday’s late high suggest it will be retested. Delaying the retest until the open, and then not rejecting it by 10:15, would make the 1233.00 high’s retest likely. Gapping down under the afternoon’s 1223.75 low would not necessarily trigger a session-long decline, since the closing action didn’t trend up. But gapping any break under the morning’s 1222.25 low would be bearish.[/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.