Trading Plan for 12/14

Tuesday afternoon’s slide probing Monday’s low… seems to have compensated for delaying the test from Monday afternoon. Perhaps, but the attraction below has been neutralized nonetheless. The question is how much chart damage was done in the process.

Pattern points… (Setups and technicals)[pay]
Actually, there are two questions. The one posed above, whether Monday and Tuesday’s decline has damaged the chart, and whether Wednesday’s session can fix it.

Thursday’s trend change wasn’t confirmed Friday. Monday’s drop reinstated it and Tuesday’s drop confirmed. Tuesday’s confirmation was optimal, closing under both Thursday’s low and Monday’s. Except for not gaining traction on its first attempt, the trend change signal has every reason to succeed.

So, invalidating the trend change signal would be that much more bullish.

The confirmed trend change signal provides context. Immediate weakness Wednesday would be vulnerable to extending the decline, at an accelerated pace. The decline’s next lower objective is to probe under 1200.00.

Interim strength would be vulnerable to reversing back down sharply. Bouncing first could extend up to 1227.25, and there is room under extreme circumstances to test 1240.00. But closing above 1240.00 and 1244.00 would instead invalidate the trend change, just in time to trigger a bullish Wednesday Expiration Indicator.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A bullish Wednesday Expiration Indicator could also trigger from bouncing after probing under 1200.00. And it’s possible for the indicator not to trigger at all, which would still default to the trend change signal. [/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.