Trading Plan for 12/24

If failure to reach a fiscal cliff deal is bearish… and failure is obvious, then the market must already be discounting the fiscal cliff. So, would it be fair to blame no fiscal deal if the decline were to resume? Alternatively, wouldn’t the fiscal cliff have to be considered bullish if the rally were to resume despite not striking a deal?

Pattern points… (Setups and technicals)[pay]
Friday morning’s caution about the WedEx indicator proved timely, even if the WedEx indicator did not. The afternoon trended upward throughout. It did peak before touching the morning’s 1428.25 high, so the buying gained no traction. But that’s not exactly optimal for a bearish signal.

Perhaps it was the Mayans. More likely, it was the flash crash’s sudden revaluation, or Monday being an abbreviated session, into the Christmas seasonal bullishness. It may have been more eternal hope for a last-minute fiscal cliff deal.

Whichever, bearish influences were marginalized Wednesday afternoon.

The session-long decline also succeeded, technically, at keeping price in negative territory. The two may yet combine to pressure price back down Monday — with a vengeance. Sunday night’s action should clarify much.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Having bounced twice intraday to touch the 1427.25 lower-end of Wednesday night’s lows, Monday should either react down without delay, or else gap up above the range’s 1430.50 upper-end… NOTE: Don’t forget there is NO weekend strategy session. Click here for the recording of Thursday night’s “January Effect” worknight.[/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.