Trading Plan for 12/21

[pay]Pattern notes.
A very bearish resolution would be all but assured Monday if not for expiration. Normally, Thursday and Friday’s probes into the prior week’s consolidation (circled red) would be likely to gap down under that consolidation’s lows. Expiration’s influence makes that resolution less reliable.

There is still a vulnerability to gapping down. And despite increasing the distance, Friday afternoon’s rally heightened that vulnerability – having tested the morning’s 1098.00 high, not closing above 1098.00 meant buyers had expended all that energy without gaining traction.

There is a tight window available to launch any trending either way before the 3-1/2 day holiday weekend. The market is closed Thursday afternoon, so any trending not underway by noon Wednesday probably won’t be underway before next week. Sellers would likely be marginalized, but a breakout into a new rally leg might be pushing it.

Indicators and Internals.
Oversold RSIs at Friday morning’s low were never retested. The pattern there formed an Ascending Triangle that has yet to retest its breakout point. Overbought RSIs at the close are dismissed for being influenced by expiration, and not as an expression of opinion.

Monday’s opportunities.
A retest of Thursday night’s bounce that attacked 1103.00 would be targeted if Monday’s open isn’t gapping down. The attack could extend higher if 1103.00 didn’t immediately reject the bounce, or somehow prove the bounce was just more of expiration’s influence. Friday afternoon’s last relative low at 1093.00 printed during the last half-hour, so gapping under it would not signal a session-long decline. But it wouldn’t necessarily recover. A gap to Monday’s ~1089.00 low would be unlikely to sit still through the morning.[/pay]