Trading Plan for 12/19
If the Fed had begun tapering long ago… then just imagine how much higher the market would be, and how many trillions could have been saved. Seriously, though. If and when the eventual bear market comes — and now it can come — Wednesday’s reaction has left the Fed blameless, as it can point to how well the market reacted to news of it tapering.
Pattern points… (Setups and technicals)[pay]
The FOMC announcement’s knee-jerk reaction probed fresh lows including “lower prior highs” at 1762.00. Wednesday’s 1765.50 pre-FOMC low already had probed low enough to qualify as the low’s retest. The lower low was irrelevant.
So long as the lows weren’t broken through the close, WedEX had already held a test of multi-session lows for it to trigger “passively bullish.” But, wait, there’s more…
The reaction up tested Monday’s 1786.25 high. That was a corrective bounce. We established that when Monday afternoon’s bounce peaked where it did. Anyway, closing above it Wednesday triggered an “actively bullish” WedEX.
An upward bias into and out of expiration seems very likely at this point. But then came another point. The recovery above the correction’s 1786.25 high extended. And extended. Another older prior high was tested at 1805.00.
The older high’s test was still in process at Wednesday’s close. It was neither recovered nor rejected. Unless a higher probe of it were rejected through Thursday’s open to trigger a “passively bearish” WedEX, the bullish signal remains intact. Actually, gapping down back under 1786.25 would reject its recovery. Any shallower opening dip would be bullish.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping down to 1799.00 or 1795.00 would be more vulnerable to trending down through the morning, or to backing-and-filling. Probing higher overnight won’t create a “new Globex trend extreme” without there being complexity to the effort, so that wouldn’t necessarily prevent a deeper pullback intraday.[/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.