Trading Plan for 12/10

If Monday afternoon had probed the morning’s high before faltering… then the session would have been “ineffectual optimism.” But it didn’t. The afternoon high stopped 1 tick short of touching the morning’s highs. That’s pessimism. Rather than undermine buyers, it undermines the credibility of sellers that sponsored the dip back to session lows.

Pattern points… (Setups and technicals)[pay]
The least likely scenario for Monday was to range sideways without expressing any sentiment. Friday’s upward biased session lacked momentum, making Monday likely either to express it upward extensively, or else to reverse down aggressively. Monday did trade exclusively above Friday’s highs, which is extensive, but still lacked momentum.

Trending back down without first probing fresh highs is unlikely — trying to trend down is possible, probing into Friday’s range but then recovering through Monday’s highs. That pattern would not necessarily recover intraday.

That pattern would also be less likely to quickly reject fresh highs. Monday’s late-morning and afternoon pessimism compared to the open’s high, and the open’s high had stopped pessimistically short of the Thanksgiving high. All of which is potentially bullish from a contrarian perspective. Much further delay in probing fresh highs would create more contrarian bullishness to satisfy with ever higher probes.

[/pay]What’s Next… (Outlook and opportunities)[pay]
First probing the highs, and then reversing down, would be more vulnerable to reversing down substantially, if not also durably. That doesn’t mean not to participate in a move to fresh highs, nor does it mean to sell fresh highs when possible. Multiple timing windows may be spent probing the highs before reversing down, if there were even a reversal down.[/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.