Trading Plan for 12/8 – with MAR levels

Plunge by the rumor… Surge by the rumor. Eventually, become numb to the rumors? At least, Thursday’s econ calendar will offer the market something to view with greater relevance.

Pattern points… (Setups and technicals)[pay]
Tuesday night’s 1268.00 high (basis Dec, 1262.25 basis MAR) did not require a retest, since Wednesday opened under relevant support to neutralize its attraction. That support was 1260.00-1262.00. Wednesday’s reaction down from 1267.00 held long enough above 1260.00-1262.00 to keep alive the attraction to fresh highs.

Anyway, overbought RSIs at Wednesday afternoon’s 1267.00 high require its retest, which is a greater attraction than retesting Tuesday night’s 1268.00 high.

Retesting both overnight would still neutralize their attraction(s) above, but it’s too late for a reversal back under 1260.00-1262.00 (1254.25-1256.25 basis MAR) to reverse momentum down. Thursday’s open can serve as proxy by immediately breaking under 1257.50 (1251.75 MAR) and extending under 1253.50 (1247.75 MAR) without delay.

Otherwise, any shallower opening pullback or extending up through 1267.00-1268.00 (1261.25-1262.25 MAR) would make 1280.00‘s test (1274.25 MAR) likely next. One week of distribution without resolving down by Wednesday afternoon — or by proxy through Thursday’s open — allows the focus to shift forward to the weekend’s illiquidity.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Corzine’s testimony before a House committee (assuming he appears) could suck the volatility out of morning price action. His “On the advice of my attorney…” responses will still be interspersed with Representatives dressing him down — and offering the first glimpses at their understanding of the MF Global situation. [/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.