Trading Plan for 12/4

If three consecutive post-open rallies each fail… then what sort of buyers will defend against declining at the fourth session’s open?

Pattern points… (Setups and technicals)[pay]
Friday was an abbreviated session. Nevertheless, its late plunge began at its last :37 minute mark, when every session’s position-squaring window opens. And it reversed the morning’s probe of new highs to fresh post-open lows. The open’s gap up was retraced back to Wednesday’s prior close, and lower.

Monday morning’s rally began a little more choppily. But it got underway, and it was productive. Until it wasn’t. Its noon hour peak gave way to an afternoon slide well into negative territory.

Tuesday’s opening buyers can be forgiven for not yet getting the picture. They were knife-catching the overnight slide’s gap down. But that effort soon peaked — the earliest peak, yet — producing the first morning probe under the open’s lows.

Buyers are being trained not to be too optimistic too early for too long. Sellers are being trained not to be too patient anymore. The latter wouldn’t be so much of an issue, except that the lower closes mean sellers are gaining traction. In other words, this is not a corrective dip. There is no unfinished business above, and there are attractions below.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping up above Tuesday’s late 1794.00 high but under its morning’s 1796.00 “higher prior lows” would be too shallow to reverse the trend up. But it’s the only way to delay the oncoming capitulation that is the next natural step when buyers have become more patient than sellers. Absent a gap up, Wednesday’s open could already be declining sharply.[/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.