Trading Plan for 12/4

If you knew in 1929 what was coming around the bend… then would one of your clues have been the string of new high closes? FT.com reports that Wednesday was the year”s 48th record, tying 1929 (while still far short of 1995”s 77 string). .

Pattern points… (Setups and technicals)
Wednesday”s new high probed last week”s 2073.25 intraday highs. That fulfilled expectations for the pattern from Monday”s gap down. Last week”s 2076.25 overnight high was retested, too. Wednesday”s new high close did not close above prior intraday highs, and its probe to fresh highs wasn”t complex, so it did not qualify as a breakout. And Wednesday afternoon”s bias-up didn”t trigger, so its target was never in-play.

So, no higher targets or attractions are in-play.

That”s not necessarily bearish. Wednesday”s rally did gain traction for its efforts… again. The bias environment was exited above the noon hour”s high, and the 3:10-3:20 window (proxy for the final hour”s entry) trended to fresh session highs. Like Tuesday”s traction had indicated for Wednesday, fresh highs Thursday would be undermined only by gapping down sharply.

Beware a gap down, but also beware a reversal from probing new highs. This recovery from Monday”s gap down was expected, and now its minimum objective to retest last week”s highs has been fulfilled. More so, it began impatiently Tuesday without first retesting Monday”s low. That may soon be sorely missed just when it is needed most — trying to extend into a breakout above prior highs.

What”s Next… (Outlook and opportunities)
Mario Draghi”s press conference following Thursday”s ECB policy statement is reliable for keeping the market lively. An afternoon slowdown ahead of Friday”s Employment Situation report (NFP) is likely. Note that the ADP report”s big miss Wednesday doesn”t discount a strong NFP on Friday — its reaction would likely be very bearish.