Trading Plan for 12/16

What a difference 3 ticks makes… If this morning’s 1238.00 bias-up signal were 1238.75, then this morning’s bias environment would have been clearly no-bias. Instead, the signal was opaque, and the 1233.00 bias-down signal would have been actively in-play. [pay]

Pattern points… (Setups and technicals)
Wednesday’s close under 1233.00  was a little too close to 1233.00 to be considered a decisive break. In fact, 1233.00 was being probed as resistance minutes after the futures close. But a decisive close under 1233.00 would have targeted an overnight test of either 1227.75 or 1225.25, to be recovered into Thursday’s open.

If 1233.00‘s late recovery means it wasn’t really broken, then Thursday’s open should have already recovered 1235.00-1236.00, on the way to 1243.00. And it would mean Wednesday’s drop had been skewed by expiration.

Closing under 1230.00 would have suggested 1243.00‘s test was satisfied by this week’s highs. Closing under 1230. would have reversed momentum down into and out of Friday’s expiration. And 1230.00 is the only untested “lower prior high” before 1200.00 as noted in yesterday’s Trading Plan.

The chance to point the market down was ignored Wednesday by holding tests of 1230.00 as support. But Monday’s 1235.25 low was broken as support, which would signal the trend reversing down if not recovered Thursday. Breaking under 1230.00 and not quickly recovering could trade down hard into Monday’s open. Otherwise, 1230.00 is the range’s lower-end and the upper-end is 1243.00.

What’s Next… (Outlook and opportunities)
1227.75, 1225.25… Failing to recover from probing fresh lows Thursday could quickly melt down into the weekend. Any bounces here would be temporary if not tested and rejected before or into Thursday’s open… Recovering 1235.00-1236.00 overnight would be bullish, confirmed above 1237.00 and 1238.75. That’s a lot of resistance and it is tightly compacted. But any test of 1243.00 could be rejected in the blink of an eye. [/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.