Trading Plan for 12/11
[pay]Pattern notes.
Wednesday morning’s distribution probably wasn’t intended for so limited a purpose as simply to attack Tuesday afternoon’s lows. But that’s all Wednesday morning’s sellers got for their efforts. At least, so far. A gap up, probes of higher highs, and then a brief mid-afternoon visit to prior lows testing 885’00.
The low didn’t even touch Tuesday’s low, and Wednesday’s last 90 minutes bounced 17 points to 902’00. This last-minute bounce came after several other probes above 895’00 each failed. The 902’00 test was eventually retraced back under 895’00 just like the earlier probes, but not until after the Globex open. Waiting through the cash session close prevented sellers from regaining traction, and made it more difficult for them to do so.
No, opening weakness down to 889’00 could still recovery nicely. Gapping down under the 885’00-887’00 area would allow a brief, small bounce before extending down further. But a gap up above the last-minute 902’00 high would put into play a retest of the week’s highs up to the 920’00 area – and depending upon the timing, either a 15-20 point surge or a 35-40 point purge.
Indicators and Internals.
MACD & RSI were only modestly improved at Wednesday afternoon’s lows. Only modestly, if that. They were oversold deeply and long enough to account for the late 17-point rally. But too oversold for too long to account for a sustainable recovery. It’s not that Wednesday’s lows require retesting – that simply wasn’t a compelling bottom, and now a corrective bounce may have ended.
Thursday’s opportunities.
Unless buyers are productive overnight, we’ll monitor the open for whether sellers are renewing the prior afternoon’s effort. Their reward seems too brief and shallow for that morning’s effort, so this extra delay should be rewarded by making the drop that much more substantial – back to last week’s lows before the weekend? If sellers aren’t obviously in control after the pre-open econ reports, we’ll consider parameters for going long.
Note: The December contract still trades as front-month Wednesday night. The difference from the March contract is only 1-2 ticks, more often only 1 tick. [/pay]