Trading Plan for 12/27

If the rally wants any buying pressure outstanding to keep pushing price higher… then it will need to insert a downdraft much sooner rather than later. The eight-day rally underway through the FOMC statement has exceeded last month’s high by the same distance that it had originally reacted down.

Pattern points… (Setups and technicals)[pay]
Apparently all of the market’s Grinches were busy today standing in line at return counters throughout the mall. Meanwhile, Thursday’s session imitated Tuesday’s session-long rally by trending straight up to new highs through every intraday timing window. And Tuesday’s session wasn’t even normal length.

Despite the relentless strength, there are still hints of pessimism. That’s important, because it can be bullish from a contrarian perspective. The morning’s bias-up target wasn’t met until the bias environment had begun lapsing. The afternoon’s bias-up target was met to within 1 tick, after its bias environment had begun lapsing.

So, an immediate downdraft would not be very credible for reversing the trend down, and would likely recover. It would also help to relieve the pent-up selling pressure from having rallied in 8 of the past 9 sessions. Closing higher again Friday would put into play 1856.50 and potentially also 1869.00 before a downdraft could be credible.

[/pay]What’s Next… (Outlook and opportunities)[pay]
No hold long was contemplated Thursday, but only because the next higher attraction was already within 1-2 points. Maintaining fresh highs through Friday’s open would overcome that challenge, and likely be rewarded intraday by extending higher. By the same token, not quickly capturing that nominal extra ground would stop reflecting pessimists yet to be converted into buyers, and start reflecting buyers becoming weak-handed.[/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.