Trading Plan for 12/8
[pay]Pattern notes.
There were a variety of reasons not to consider Friday morning’s low as being a bottom. (They’re listed in yesterday’s Trading Plan.) Now there’s more, since two more rally attempts have failed. Sunday night’s opening surge, and then Monday’s, each reversed down from tests of 1110.25.
There’s one reason why Friday morning’s low may be a bottom after all – it has yet to be broken. This delay has the hallmark of excessive pessimism, since the overnight low and afternoon low each stopped short of touching the prior low. A recovery wouldn’t be the product of strong buyers.
Now Monday’s last hour has avoided printing fresh lows. That’s not implicitly bearish, so long as buyers exploit the success by rallying above resistance. Buyers didn’t rally above resistance because it wasn’t their success to exploit. Monday’s last hour held up because of patient sellers. Recovering from a fresh session low would have reflected serious buyers at work.
Still, sellers have yet to gain new traction. Meanwhile, there’s still room for another doomed rally. A bias-up would get a benefit of the doubt if triggered. A sell-off isn’t any more likely until sellers gain traction, but it would be more appropriate at this stage of the pattern. The biggest concern is that one thirty minutes were spent trending Monday, making it difficult to start trending Tuesday.
Indicators and Internals.
A fresh low during Monday’s last hour would have been accompanied by RSIs diverging positively. Technical improvement was non-existent despite price firming into the last half-hour. Sellers must fulfill this signal early Tuesday.
Tuesday’s opportunities.
Final trending was sloped upward, and the afternoon’s 1100.00 low printed prior to the last half-hour. Gapping down under 1100.00 would signal a session-long decline. A well-time break under 1096.75-1097.50 could trigger a retest of the 1087.00 area. Back above 1108.25 would resume Monday’s bounce efforts, probably without success if begun by gapping up.
Don’t forget about next week’s test of the upgraded chartroom platform. If you have a Mac or Windows 7 machine you’ve been wanting to test, the time is coming…[/pay]