Trading Plan for 12/24

If Monday’s bullish WedEX had been aggressive… then the morning would have probed overnight highs and kept going. But the overnight rally was preserved, and its high was probed. And now its bullish influence has lapsed.

Pattern points… (Setups and technicals)[pay]
No real surprises Monday, which rallied overnight, but failed to extend any intraday higher highs. The bullish WedEX wasn’t aggressive as a complement to Friday afternoon’s defense against sellers, but it produced a fresh high. Friday’s breakout was confirmed Monday, but only by a session that netted no improvement from the open. And that lack of improvement comes from ending the day where its gap up began.

Unimpressive as it may be, there is no re-gifting Monday’s rally. Gapping down Tuesday back into Friday’s range would be credible for trending down into the early close, but not reliably. Rather, an opening dip could find that overnight sellers disappeared like Sunday night’s buyers. Trending is difficult to reverse in light volume, but more difficult to begin in abbreviated sessions.

Extending the rally faces similar challenges. Not that overnight buyers can’t force another gap up, but extending higher intraday would be difficult. At least pulling back from a gap up would leave outstanding the gap to attract price higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Attendance in the Chartroom is thin, as it should be this week when trading is more difficult, and when family is a welcome distraction. If you’re planning to leave early Tuesday, have a very Merry Christmas — overnight futures trading doesn’t re-open until Thursday morning.[/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.