Trading Plan for 12/16

Thursday’s gap up tried to invalidate… Wednesday’s Expiration Indicator, but failed. There should be no second bite at the apple, unless the second bite were going to succeed.

Pattern points… (Setups and technicals)[pay]
After rejecting Thursday’s opening gap up, the balance of the session did nothing predictive. And that, in itself, is bearish.

The balance of Thursday’s session ranged sideways exclusively in positive territory. Combined with gapping up, and probing a prior high, sessions can’t behave much more optimistically. Except for one thing — actually closing above a prior high.

Instead, Thursday’s session was essentially “ineffectual optimism.” A lot of energy was expended to avoid negative territory, but buyers gained no traction for their efforts. This is essentially bearish.

I qualify the bearish ineffectual optimism as “essentially” because the morning’s high was never probed and rejected again. The setup is vulnerable to a wildcard, and Expiration is the biggest wildcard (quadruple witch, no less). Immediate strength above 1216.50 at Friday’s open would be credible for gaining traction to probe fresh highs.

Otherwise, the likelihood is for immediate weakness under 1208.00 if not also under 1204.00, and for that immediate weakness to trend down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
High-profile econ reports are rare on expiration sessions, but CPI is due before Friday’s open anyway. Any trending underway after its knee-jerk reaction is absorbed would be likely to persist through the open.[/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.