Today's Trading Plan: Setting Up For New Highs Again

By Ryan Mallory of SharePlanner

Tuesday, December 6, 2016 10:02 AM EDT

Technical Analysis:

The S&P 500 (SPX) opened strong yesterday in the wake of the Italian referendum, but as has been customary in the previous five trading sessions, the price action faded the early morning gains.
On the flip side, SPX did manage to regain its 5 and 10-day moving averages.
It will be important for SPX to re-establish new all-time highs, or the two day bounce that has been seen here will be simply viewed as a dead-cat bounce.
Russell Index (IWM) was incredibly strong yesterday posting a strong bounce following its 5-day sell-off.
Volume on SPDRs S&P 500 (SPY) was lower for a third consecutive day, and came in below recent averages.
A large gap left unfilled on SPY from yesterday's price action, however, a break above yesterday's highs, could be all this market needs to push back towards establishing new all-time highs once again.
Crude (/CL) is looking at a substantial sell-off today, trading down 2.3% already. On United States Oil Fund (USO) it is looking at an open that takes price into the gap. The tendency of late is for the market to only pay attention to oil when it is trading higher.
Lower highs continue to be made on the T2108 (% of stocks trading above their 40-day moving average) and has established lower-highs on each major surge to new highs that occurred in July and again in November. This should be a major concern for traders as the the highs aren't being made on substantial breadth across the market. Typically I would expect well over 80% of stocks trading above their 40-day moving average when price is at all time highs. Right now it is at 66%.
With the election behind us, the market should start to turn its attention to the Federal Reserve and the eventual rate hike that will come on December 14th when the next FOMC statement is released.