Trading Plan for 12/18

If it”s a knee-jerk reaction to news… then it”s weak-handed. This applies to econ reports, headlines, and FOMC Q&A sessions. So, when the market responded to Yellen”s sentences by declining, each of those dips merely stretched the rubber band tighter. And when those weaker hands were done, the rubber band could snap back up.

Pattern points… (Setups and technicals)
Yellen”s Q&A retraced the initial FOMC reaction from above 2007.00 to back under 1991.00 where the news had been greeted — and then lower to attack 1985.00. My buy signal triggered back above 1991.00, targeting new session highs and then 2009.50-2012.00.

The afternoon”s rally got to 2011.00. That”s still pessimistically short of recent rallies to this area, so a higher high up to 2017.75 is likely. Any higher would target the 2030.00 area.

My corrective bounce template finally caught, but not without first having to absorb 2-3 downlegs that had attempted to resume the decline. Those caused a delay that allows the template to extend through Thursday morning. Not already reversing down by Thursday afternoon could extend the rally through Monday morning.

In fact, the WedEX indicator triggered passively bullish. Had Wednesday not been an inside day, the indicator would have been actively bullish. WedEX controls primarily Friday afternoon and Monday morning. Since it was a passive signal that triggered, extending much higher too quickly Thursday could invert the bias back down. Regardless, the near-term burden of proof is on sellers.

What”s Next… (Outlook and opportunities)
As with the two prior sessions closing in this range, so long as Thursday”s open isn”t already in the process of rejecting Wednesday”s last rally legs — at least probing back under 1999.00 or 1985.00 — then the corrective bounce remains likely to extend higher Thursday.