Trading Plan for 12/9

If the payrolls’ gap up reversed the downtrend… then it’s probably not going to be very durable. A lot of distribution preceded it, and unfinished business was left outstanding below.

Pattern points… (Setups and technicals)[pay]
Friday’s gap up didn’t extend higher immediately. The morning was spent defending a dip from 1802.75 back to the 1796.00 bias-up target as support. The afternoon’s probe of fresh highs touched 1806.00, but that didn’t really extend higher either. Its reaction probed back under the morning’s 1802.75 high.

But Friday afternoon did leave outstanding its 1807.00 bias-up target. Its attraction should propel Monday’s session higher to retest the prior Friday’s 1812.50 high. A detour is possible, albeit unlikely. Only gapping down back under Thursday’s 1790.00-1792.00 high would resume last week’s initial decline.

As for last week’s initial decline — including the prior Friday, four consecutive sessions rejected their morning rallies — that represented an inordinate amount of selling pressure. Filling the gap back down to 1777.75 neutralized its momentum, but did not fulfill its selling pressure. No gap up can invalidate the distribution that preceded it, or the unfinished business below that was left outstanding.

[/pay]What’s Next… (Outlook and opportunities)[pay]
We’ll flesh out those bigger picture influences this weekend during the Saturday Strategy Session. Join us at 9:30 ET, as we discuss everything from the bigger picture, to analyzing your chart requests. See you there![/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.