Trading Plan for 12/15
If not for the impending weekend”s illiquidity… then would Friday morning”s low have been probed at all before the close? It was actually broken considerably, but not until the last hour”s capitulation.
Pattern points… (Setups and technicals)
That”s Friday”s key element. The decline didn”t gain traction — meaning that the drop through Friday afternoon was sufficient to reward earlier sellers for their efforts. Sellers were content as the bias environment exit and noon hour”s entry both were within the noon hour”s range. A 24-point drop waited to begin until the final hour was underway.
The late sponsorship is either weak hands about to be absorbed and reversed, or strong hands extending the drop at an accelerated pace. The former scenario would be a strong possibility if it weren”t forming over a weekend — gapping up enough Monday could have been bullish. Gapping up too shallowly is likelier, and the latter scenario of simply extending down is likeliest.
The pattern is somewhat reminiscent of Friday, October 16, 1987. It seemed initially to have stabilized a multii-session drop, then plunged into the weekend, and out of it. Things are different now, as they always are. Late sponsorship usually doesn”t extend, or it is reversed if it tries to extend. October ”87 was an exception, and the same door is open Monday.
Things are always different, but those things always qualify as recent developments that price hasn”t yet discounted. Two candidates are Democrats threatening another capitol closure, and Wednesday”s quarterly FOMC Q&A threatening to reveal the Fed can”t save the day. Friday”s so-called Quadruple Witch compares closest to 1987”s crash as that exacerbates the institutional risk reassessments, which wreak havoc on portfolios,
Should be a fun week.
.
What”s Next… (Outlook and opportunities)
Another “Black Monday”? This would follow Tuesday”s failed trend change signal, Wednesday”s confirmed trend change signal, Wednesday and Thursday”s sellers gaining traction, and Friday”s sell-off into the close. A test of 1969.00 seems likely on this leg — Friday”s cash session close was 1995.50 and futures extended down another 5 points. Back above 2010.50 would suggest a deeper drop had been avoided… for the time being.