Trading Plan for 12/13
If Thursday’s last downleg had begun any earlier… then it probably would have closed under the morning’s low to qualify as a hold-short. But it was all sellers could do just to return to the morning’s low by the close. They ran out the clock so there wasn’t time to change possession of the ball. Friday’s buyers might need nothing less than a 90-yard kickoff return to regain control.
Pattern points… (Setups and technicals)[pay]
The premise for Thursday’s session was that it wouldn’t immediately resume trending down, but that it would resume trending down eventually. The morning’s choppy ranging around Wednesday’s lows served that initial purpose, although a higher corrective bounce was more likely.
Having corrected too low, the noon hour’s probe of new lows bounced from support instead of trending down. That bounce was sizable, but it gained no traction since it developed entirely during a no-bias environment. The bounce’s retracement was also sizable, and it was also ill-timed.
Thursday’s sizable ill-timed plunged might avoid the same consequence as the afternoon’s rally. The bounce peaked at resistance when it needed new sponsorship to break higher, with time remaining for opposing sponsorship to push lower. Similarly, that push lower fell to support, and needs new sponsorship to break lower — but there was no time remaining for opposing sponsorship to rally.
Neither buyers nor sellers gained traction for their efforts Thursday. But it is not from equilibrium, and the next trending signal is that much likelier to extend.
[/pay]What’s Next… (Outlook and opportunities)[pay]
5-6 week old “lower prior highs” around 1762.00 are likely to be tested. And since testing the last prior low last Wednesday produced a relevant bounce, the next prior low’s test probably will not. Nevertheless, beware of the potential to bounce up sharply from new lows, especially if not maintained through the open. Meanwhile, gapping up above Thursday’s 1777.00 highs would be credible for extending higher, but anything shallower would be suspicious. [/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.