Trading plan for Dec. 20, 2016

ESH7 Dec. 19, 2016. Daily chart.

The ES ended the day with a small gain on thin volume. The Dow is continuing the march toward 20,000 and seems to be pulling the SPX along with it.

This isn’t the Santa Claus rally the Street was hoping for, but the market has come so far so fast since the election – now finally over with the completion of the Electoral College voting Monday – that a pause is almost mandatory.

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The consolidation pattern is easy to spot on the daily chart… a series of higher lows and lower highs forming a wedge. The chart pattern, the overbought condition and the the declining volume suggest a further retracement. The seasonal bias suggests a little more room (but not much) on the upside.

We’re expecting the market stay within the consolidation range from 2245 to 2275. A move outside that range will give the first hint at the future direction.

The daily PMO indicator is still extremely overbought condition. The slow STO indicator remains overbought. Both indicate that the upside is limited.

2275-85 will be first resistance zone again today. Due to the holiday season, selling still should be minor, volume will be light, and sudden price moves in either direction are possible.

A move below last week’s low 2243 could push price toward the 2235-25 zone. However the 20-day moving average line at 2220 level should hold ES up.

Support and resistance

Major support levels: 2213.50-12.50, 2201-2199.50, 2193.50-95.50, 2183-81
Major resistance levels: 2268-72.50, 2279-83.50, 2288.50-93.50, 2300.50-05.50

Outlook

Short-term —- Bullish
Medium term —–Bullish
Long term —- Bullish

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