Trading Plan for 12/20

Big, BIG target met… at Monday’s lows.And it was met too late to entice counter-trend buying. Is that the only reason for not reacting up? If not, then much lower lows lie dead ahead.

Pattern points… (Setups and technicals)[pay]
The objective of last week’s trend change signal was to probe under 1200.00. The specific target of last week’s distribution patterns was 1197.75. Last Wednesday night’s weakness momentarily touched 1198.00. Its reaction up became two days worth of testing 1220.00 resistance. Three days, counting Sunday night’s rally.

Anyway, the bearish Expiration Indicator forced Monday morning’s drop. And it extended down to fulfill both the probing under 1200.00 while testing 1197.75 down to 1195.50.

Monday’s close was still in the process of testing 1197.75. A second consecutive lower close under Monday’s 1195.50 low would put into play the next lower objective at 1170.00. This would not preclude an interim intraday bounce Tuesday to test 1204.00.

Recovering 1204.00 through a relevant timing window Tuesday would start to form a bottom. A subsequent dip could still retest Monday’s 1195.50 low — and probably would — but its test would likely hold as support if 1204.00 had been recovered through a relevant timing window.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Regardless of Tuesday’s pattern, lower lows can be probed overnight without gaining traction. Not probing a lower low overnight would make fresh lows very likely Tuesday.  While the decline may yet extend down, closing strong enough Tuesday could trigger a Christmas rally..[/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.