Trading Plan for 12/3

If there were any unfinished business above… then Monday morning’s rally might have neutralized it. There was none, but at least the timing of Monday morning’s bounce left no doubt..

Pattern points… (Setups and technicals)[pay]
There being no “unfinished business above,” Monday’s delayed decline is that much more bearish. The week wasn’t greeted pessimistically. Sellers weren’t so aggressive as to prevent an optimistic bounce. And optimists were in given a little more rope with which to hang themselves.

New rope. Not that week-old stuff whose selling pressure would have been residual leftovers. Instead, Monday afternoon’s 12-point slide was all new selling pressure.

But that new selling pressure still can’t be trusted to launch a downleg. Monday’s low momentarily pierced last week’s 1798.75 prior low. Its prior high was probed in the interim. There is no bullish reason for returning down to 1798.75. But closing back above it suggests extending down will be difficult without another corrective bounce.

Extending down anyway — closing Tuesday under 1796.00 — would essentially put into play 1780.00. Bounces meanwhile should hold 1805.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Trying to extend down at Tuesday’s open could be absorbed and reversed for a bigger corrective bounce. More important to knowing how this week ends is knowing just how big of a bounce — or how big the bounce won’t be allowed to get. [/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.