Trading Plan for 1/3
Sometimes, it’s “out like a lion.” I had just warned, as Friday’s last half-hour got underway, of “zero predictability for sizable last-minute position jockeying into year-end.” The 3-1/2 point plunge would have made my point. But then came a 6-1/2 point surge into the futures close. Let’s hope 2011 doesn’t come in like a lamb.[pay]
Pattern points… (Setups and technicals)
Thursday’s sellers failed to gain traction because 1254.00 held all tests through all relevant timing windows. Friday’s gap down under it – and under the 1252.50 bias-down signal, too – gave sellers another chance. But the bias environment’s exit recovered 1252.50.
The bias environment’s exit nearly recovered 1254.00, too. But in a twist from its role Thursday, it held as resistance through every relevant timing window Friday.
The late plunge doesn’t belong to Friday so much as to 2010. So it is irrelevant. Its low is interesting for bottoming within 1 tick of the afternoon’s 1251.00 bias-down signal. And its close is interesting for having recovered above both 1252.50 and 1254.00.
Friday’s 1257.50 futures close is interesting, too. But it is no more relevant than the plunge several minutes earlier. Any follow-through would be a function of having held 1254.00 support, and not to retest Friday’s futures close. Similarly, a gap would be measured from the 1254.25 cash session close.
What’s Next… (Outlook and opportunities)
Not declining immediately Monday would leave outstanding the potential for probing last Wednesday’s 1258.50 high. Its probe to 1259.25 or 1261.25 would be likely to reverse back down. Back under 1256.00 would become very vulnerable to extending down sharply well into the new year. Back under 1251.50-1252.00 at any time would signal the downleg already underway.
Happy New Year! Here’s to a great 2011 (and especially to volatility’s return). I’m so appreciative of my subscribers, and I look forward to another prosperous and information year… P.S. We’re having a workshop Wednesday evening, details to come.[/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.