Trading Plan for 12/6

If buyers were due a reward for absorbing Tuesday’s shallow dips… then how much bigger is that reward after absorbing Wednesday’s plunge? Or, is the bigger concern that there may be a pattern of not rewarding buyers for their efforts?

Pattern points… (Setups and technicals)[pay]
Buyers stopped Monday’s drop from breaking under a prior low, and Tuesday’s fresh lows gained no traction. Wednesday’s steep, deep drop was retraced entirely. If buyers aren’t being rewarded Thursday, then a bigger drop must be underway.

Rewarding buyers consists of Wednesday afternoon’s 1416.75 bias-up target. The 1411.00 bias-up signal barely avoided being rejected, barely, so its target becomes unfinished business above. Add that to Monday’s 1421.50 gap up and the pre-open 1424.00 “new Globex trend extreme.” They all require a test eventually — 1424.00‘s retest is required intraday — which is likely to include 1425.50.

Closing under both Wednesday’s noon hour high and low means that buyers gained no traction. Sellers gained no traction Wednesday, too, since the noon hour high wasn’t probed before closing under the noon hour low.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Like Wednesday’s opening parameters, rallying should begin by aggressively. If Wednesday’s late 8-1/2 point drop to 1406.00 neutralized excessive optimism, then Thursday’s open should gap above Wednesday afternoon’s 1414.75 high. Otherwise, Wednesday’s late drop will be attracted further down to unfinished business below from the oversold RSIs at Wednesday’s 1396.75 low. [/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.