Trading Plan for 12/29

[pay]Pattern notes.
Monday’s close was slightly positive on the day, recovering from negative territory. But I still view the price action as validating our shift in strategy to selling opening strength. The question is whether we’ll get another opportunity.

Monday’s last half-hour triggered a short-squeeze that peaked within 1 point of its target. So, already a meaningful amount of buying pressure has been expended. It might be sorely missed at Tuesday’s open. Considering this challenge, not reversing down quickly from initial strength would give buyers a chance to gain traction, after all.

Monday’s open gapped up to 1125.00, which doesn’t require a retest, but it’s likely. Reversing back under 1121.25 would signal that the opening strength had been absorbed. Monday afternoon’s dip cleared the way for a test 1115.00. Above 1125.00 is a wild card depending on the timing of its break – and the initial reaction.

Indicators and Internals.
RSIs diverged positively into Monday afternoon’s low, producing a 4-1/2 point bounce up to 1124.00. No other business was left unfinished, and the late bounce’s RSIs didn’t suggest the bounce had ended.

Tuesday’s opportunities.
The econ calendar is the week’s busiest. It contains post-open items that can reverse initial trending. So any initial strength or weakness can’t be taken for granted too early. Monday’s two big moves prove that multi-point moves are attainable in this environment, and also proved that patience is a virtue.[/pay]