Trading Plan for 12/17

If Tuesday”s pre-open plunge had lasted only several minutes longer… then the decline”s next massive downleg would have been underway well before noon. But isolating it served the same purpose as Monday morning”s slide, identifying that drops had begun rewarding themselves fully without attracting new sponsorship.

Pattern points… (Setups and technicals)
Context helped to prepare for that, too. Both Friday and Monday”s declines had not gained traction for their earlier efforts. Their sellers were fulfilled, without putting into play any lower target that would require the trend to resume. Extending the decline without an active lower attraction tends to be short-lived.

But while the morning”s sellers had once again failed to attract sponsorship or to gain traction, buyers also failed the same task. Tuesday”s corrective bounce back into positive territory was isolated within the morning”s bias environment. 

Sellers may have overcome their shortcoming by trending back down through the afternoon”s multiple timing windows. They made a fresh low under the decline”s next lower objective at 1969.00, which had been tested already intraday at the open. But it was too late for anything but to overlap it. Still, not much more than a gentle breeze could push price over the edge and start trending to its next lower objective at 1907.50. 

A corrective bounce has room up to the 2020.00 area while still being only a temporary correction. Before Tuesday afternoon”s extra downleg, a temporary correction was likely either into or initially out of Wednesday afternoon”s FOMC events. Gapping up above that downleg”s 1992.75 origin would make a corrective bounce likely again.

What”s Next… (Outlook and opportunities)
Is a dry cleaners morning possible in this environment? Three conditions would contribute to that: 1. If the drop isn”t extending at the. 2. If the corrective bounce”s path isn”t clear coming out of the open. 3. An impending event is inhibiting price action… The afternoon”s FOMC even is the third condition, but the first two are much more influential. Trending down into Wednesday”s open could be very ugly intraday.