Trading Plan for 12/3

[pay]Pattern notes.
Two intraday 30 point uplegs, and a last-minute 20-point surge. An amazing feat, or collection of feats. Equally impressive is that the cumulative effort can still be considered “ineffectual optimism.” The optimism began when the open gapped up, and persisted while the entire session was spent in positive territory. But the session peaked upon retesting the prior afternoon’s high – the origin of the Monday’s last downleg.

The last-minute surge actually made it easier for sellers to retake control. Previously, this would have required gapping down almost entirely under the intraday 818’00 lows. The recovery raised this signal to 838’50 to rob buyers of their traction. This alone would not put into play a break to new lows, but a probe of Monday’s lows down to 807’00-809’00 would be viable.

Tuesday’s last-minute surge also fulfilled the 851’00 target. This was originally targeted by the noon hour rally, whose hesitation made the higher 857’00 target as likely. Who knew. Regardless, satisfying the 851’00 target is the same as chipping away at its resistance. If Wednesday’s open isn’t gapping down, then it’s probably on the way to 857’00.

Indicators and Internals.
MACD & RSI diverged negatively as S&Ps tested 851’00 into and out of the Globex open. Only 1-minute RSI diverged positively into its reaction down to 844’50. It’s a good start to could be a choppy session overnight, but not yet clear that sellers will prevail.

Wednesday’s opportunities.
Testing either end of the 838’50-851’00 range won’t assure a break either way, and could just as easily reverse back into the range. But a break beyond either end would be a good start to whichever side of the equation intends to retake control. That control might last only through the morning’s econ reports ending at 10:00. Or that control might persist into the 2:00 Beige Book.[/pay]