Trading Plan for 12/4

[pay]Pattern notes.
Yesterday’s late surge triggered its buy signal above 860’00 came after the last half-hour had already started. That can hurt a signal’s credibility, it can undermine the buying that it triggers, and it can make any eventual gain vulnerable. In this case, the 870’25 target was probed by 3-1/2 points that were returned into the cash session close, on the way down to 855’75 overnight. A 20-point rally up to 875’50 probed yesterday’s high, but that was only knocked back down to 863’00.

In short, buyers haven’t stopped, but their timing reveals that these particular buyers are “weak hands.” They expend their buying energy at times when their efforts have no lasting value, and their gains aren’t building a base from which a durable rally could be launched.

That doesn’t make higher highs impossible. In some ways it makes higher highs likely, since sellers don’t yet appear ready to step up their own efforts. Perhaps they’re waiting to fill the gap back to last Friday’s 895’00 close – it’s not required to be filled, and neither is a retest of its 880’00 prior relative low, but one or both is in-play if sellers aren’t obviously back in control from present levels.

Indicators and Internals.
Technicals diverged negatively into overnight highs. That accounts for the 13-point pullback currently underway. It doesn’t necessarily account for it fully, but selling pressure doesn’t seem to have worsened along the way.

Thursday’s opportunities.
The recovery from overnight lows probed yesterday’s high by only a couple of points in a way that could qualify as a retest. So there is no requirement to retest the overnight high, which would make its break that much more meaningful – especially if maintained. But one retest would still be vulnerable to bringing back sellers in a big way.

A retest would be credible here because the overnight pullback’s recovery has now been retraced by 61.8%. Back above 869’75-870’75 would confirm the retest underway, with potential up to 878’25 or 880’00. Under 863’75 would instead target 858’50 where any lower would signal sellers already retaking control.

Jobs data and interest rate announcements are influential this morning. This afternoon should be interesting with the arrival of anxiousness before tomorrow’s Employment Situation report. That tends to paralyze price action, but sometimes it enhances it, and that would not surprise me this afternoon.[/pay]