Trading Plan for 12/3

New highs, and then what? The three-week long pullback ended just two days ago. The trajectory since then hasn’t been relentlessly steep, but its pullbacks have been relentlessly shallow. [pay]

Pattern points… (Setups and technicals)
Optimism ahead of Thursday’s 10:00am econ report took price back up to the 1211.75 pre-open high. Almost. It was optimism, but the optimism wasn’t rampant, and that left more room to react favorably to the news.

Optimism ahead of Thursday’s close was also kept in-check. Largely. The afternoon had ranged 2 points either way around 1219.50 between 1216.75-1221.75. Firming into the cash session close added 2 points to the range’s upper-end. It was optimism, but it wasn’t rampant.

Like the morning’s rally, it leaves room to react favorably to the pre-open Employment Situation report. Alternatively, it also creates an anchor for a recovery in case the reaction is negative. So, a positive reaction isn’t required and a negative reaction isn’t likely, but a negative reaction would likely recover.

An immediately favorable reaction could have the least bullish effect. A lot of buying pressure has been expended since gapping up from Monday’s close. There was no refueling dip Wednesday or Thursday. A shallow favorable reaction up Friday might not get too far for too long before getting very heavy, very quickly.

What’s Next… (Outlook and opportunities)
A pre-open test of new highs around 1228.00 would help to prevent sellers from gaining traction on any reaction down. A negative reaction has room down to 1218.00 before becoming unlikely to recover at all.

These levels will be important, because the 8:30 report’s initial reaction might not last long. Two more econ reports are due simultaneously at 10:00.

This being a Friday, the morning’s 10:15 bias signal is likely to persist into the afternoon. Triggering a bias-up could marginalize sellers for the day. And new highs entering the weekend tend to extend higher coming out of it.  [/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.