Trading Plan for 12/31
[pay]Pattern notes.
Two morning pullbacks produced new session highs into noon. Several afternoon dips produced a 13-point rally to new session highs into the close. The cash session’s 888’00 high was probed into the futures close, adding nearly 2 points afterwards. Having held prior lows intraday, the pattern was more vulnerable to gaining ground. But the aggressive slope borrowed heavily from what could have been substantial follow-through Wednesday.
This being the year’s last session, price behavior is influenced to factors not generally encountered on other days. Tuesday offered a glimpse when the afternoon repeatedly probed prior highs as support, dumping sellers like so much ballast. The last hour wasn’t going to range sideways, and sellers didn’t retake control, so the only remaining direction was up.
Similarly, Wednesday’s open might be entirely at odds with Tuesday’s last-hour surge, rejecting it at the open. That might have significant repercussions intraday, but probably not affect the overall outlook.
Indicators and Internals.
1-minute MACD & RSI diverged negatively as S&Ps firmed further after the cash session close. The 3-minute RSI became more overbought. This would have made a bullish combination intraday. But coming at the close requires the next session’s open to gap. Gapping higher could expend all available near-term buying pressure, or but a gap down that holds above 883’00 prior highs would be likely to recover.
Wednesday’s opportunities.
Extending up another 4 points to 892’00 would allow room down to 883’25 without sellers gaining traction. Holding a pullback first down to 883’25 would make a recovery up to 892’00 likely. But also is vulnerable to extending down. And gapping under 880’50 could find 873’00 and 864’00 under attack before the close.
Jobless Claims highlights Wednesday’s econ calendar. Wednesday afternoon’s price action might try trending into a narrowly ranging last hour, but probably at higher levels if sellers can’t retake control at the open. [/pay]