Trading Plan for 12/7

It took long enough… and then not long enough. Much of the session had ranged around Monday’s close before finally surging higher. Sharply higher, not so much to compensate for the delay, as to fulfill an objective above rather than to leave it outstanding. Without remaining aloft long enough, the surge was retraced entirely.

Pattern points… (Setups and technicals)[pay]
Tuesday afternoon’s surge to 1265.75 stopped short of touching a prior high, which stopped short of putting higher objectives into play. But its high was high enough to satisfy the afternoon’s 1262.75 bias-up target, while also neutralizing an attraction up to 1265.00.

Being the product of a fresh breakout, and having very little time remaining in the session, simply correcting the fresh target was not an option. It would either extend higher, or else retrace entirely. Perhaps 1261.00 could have held as support, but it did not, and the 1257.50 bias-up signal was retraced entirely.

More significant is that 1257.50 equated to the cash session close. Sellers expended a lot of energy to get there, and gained no traction for the effort. The drop fell another 3 points after the close, but its sponsorship was too late to be predictive.

Even more significant is that the extra 3-point drop touched 1254.25, which was the afternoon bias environment’s low. The cash session closing under it would have been worth considering a hold-short through the close. In other words, sellers didn’t just fail to gain traction — they expended all available pre-close and post-close energy possible without doing so.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Expending all available selling pressure into the close is not necessarily bullish, but it can be a start. It tends to precede either an immediate reversal back up, or else immediately extends the drop much lower. Regardless of how either scenario might play-out, not yet exploiting the four-day distribution pattern by Wednesday’s close would become vulnerable to resuming the rally.[/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.