Trading Plan for 1/10

If Wednesday’s intent was to entrench buyers… then the patience may pay-off handsomely. The morning’s fresh highs created a higher objective, and the rest of the session’s decline expended sellers. Did it expend enough

Pattern points… (Setups and technicals)[pay]
Two consecutive sessions of gaps down and lower lows had reached a turning point. Either end the corrective dip, or become an expansive drop. Gapping up above prior highs Wednesday and extending higher to test Friday’s 1459.00 futures close suggested the former.

Reacting down from its obligatory resistance, spending the balance of the session in decline, suggests not.

But it doesn’t necessarily suggest the latter, that a bigger drop is underway. A sell signal could develop, but simply invalidating Wednesday’s recovery attempt isn’t it. Wednesday’s rally to 1459.00 created a lot of room to absorb selling pressure, and that selling pressure never probed negative territory. It also fulfilled a downside objective at 1453.00.

So, a lot of selling pressure was expended without sellers gaining any traction for their effort.

There’s also “unfinished business above” at Wednesday morning’s 1461.00 bias-up target. I still don’t expect its test to avoid probing above Friday’s 1463.00 high up to 1464.25-1465.50. None of which would matter, not in the near-term, if Thursday’s open is breaking under 1450.50… on the way down to 1413.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday’s closing action bounced off of the 1452.50 low up to 1455.50-1456.50. Closing above it would have qualified for holding long through the close. It didn’t qualify, but similar to Tuesday’s close, gapping up would be credible for extending higher intraday. And gapping down would be credible for extending, too. [/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.