Trading Plan for 12/11

PROGRAMMING NOTE: Don’t forget that next week we’ll be testing the chartroom platform upgrade to resolve Apple Mac and Windows 7 issues. No special instructions are needed.

[pay]Pattern notes.
Thursday’s gap up to 1097.25 surged briefly up to 1101.50, then plunged to 1095.25. This simple opening swing defined the day’s range, which bounced repeatedly from one end to the other. It also defined the day’s character, whose numerous intraday reversals spent almost no time consolidating at one extreme before reversing to the other.

Each intraday leg was a reaction to failed trending. The market never got into position for gaining traction, but the close didn’t even exceed the pre-open high. A gap up and an entire session spent ranging above prior highs, but no traction – i.e. “ineffectual optimism.”

Without any accumulation intraday, there isn’t much support to prevent an opening drop from extending down. But neither was there any distribution at session highs to fight off a rally attempt. This unusual setup is vulnerable to gapping in either direction.

Gapping open from this setup is equally vulnerable to extending in that direction, or to failing, and to reversing more substantially in the opposite direction. Either resolution could be dramatic on a Friday.

Indicators and Internals.
Simultaneously oversold RSIs at the afternoon’s 1094.75 low came too late to required its retest, but its retest is still likelier than not.

Friday’s opportunities.
Thursday’s ineffectual optimism did manage to close above Monday’s prior low. That was a minor accomplishment, but an accomplishment, nonetheless. It might deserve extending higher to 1103.75, and probably will if Friday’s open isn’t already in decline. Gapping down under 1095.00 could constitute that decline, but a high-profile econ report at 9:55 will keep the situation fluid. This being a Friday, the morning’s bias should persist through the noon hour. [/pay]