Trading Plan for 12/18

If FOMC tapers, or doesn’t… then a big afternoon is likely. That’s obvious. But a big morning is not likely. That should be obvious, too, but don’t lose sight of that possible limitation when in a position that relies upon trending further.

Pattern points… (Setups and technicals)[pay]
Monday’s late sell signals under 1781.00 would have been satisfied easily fulfilled that afternoon by probing Friday’s 1773.50-1775.00 “lower prior highs”. Actually dipping to 1770.25 compensated for the delay.

Recovering back above Monday’s 1777.50 low through any relevant timing window would have easily targeted a probe above Monday’s 1786.25 high. Only chipping away at the resistance of Monday’s 1777.50 “higher prior lows” has created a delay. Not a delay in extending higher, since extending higher hasn’t been signaled. A delay in resolving down, since Monday’s range didn’t require a retest first.

But Monday’s range has been retested, anyway, despite not requiring a retest. All available buying pressure has been expended without gaining traction for the effort. Tuesday afternoon’s reaction down did already dip back into Friday’s range, back under its 1773.50-1775.00 “lower prior highs” (to 1772.00). Like the resistance above, now also the support below has been chipped away. Once the FOMC lets the horses out of the barn, they should have plenty of room to run. Yee-ha.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget that after the FOMC announcement, Bernanke will host his last Q&A. Trending usually begins after the first Q, and extends until the last couple of As remain. Depending upon whether a prior high or prior low is tested, the close might also trigger a WedEX 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.