Trading Plan for 12/21

When is a buy signal a sell signal? When it fully forms, but fails to trigger. This can often be considered a sell signal. Like Monday’s close still testing 1242.00-1242.50 prior highs. A rally had plenty of time to extend higher, unless its sponsorship was trapped by stronger hands.[pay]

Pattern points… (Setups and technicals)
The range’s upper-end was likely to be retested. It was probed. And its test held. The burden of proof is on buyers, and they failed. So, the bad news for the rally is that a breakout failed to trigger after being attempted.

The good news for a rally is it can still be triggered Tuesday. Certainly, the market is well-positioned for a breakout, while sitting at prior highs. Any trending underway after Tuesday’s opening sequence could extend into Wednesday’s open, or into Thursday’s close. Maintaining a break to new highs would be bullish.

The bad news for a rally is that the market is well-positioned not to break higher. The rally since Thursday’s low has fulfilled its objective. Now higher highs have failed to gain traction through the close. Trending has been free to resume since Monday afternoon. Not trending up very early Tuesday would soon attract sponsorship for trending down.

What’s Next… (Outlook and opportunities)
The holiday-shortened week inhibits trending after Tuesday’s close, unless it has already started by then. Regardless of direction. A temporary probe beyond either end of the 1230.00-1242.50 range would lose traction. But a break underway through Tuesday’s close could extend in that direction into the new year.[/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.