Trading Plan for 1/10

A taste of things to come. Friday’s dip back down to the prior week’s high was unnecessary to prove its support. But it did help to disprove it. Its ultimate break would leave no doubt.[pay]

Pattern points… (Setups and technicals)
Friday afternoon’s bounce tested 1268.25 resistance. Any higher would have put into play a probe above the morning’s highs. It still could on Monday.

But the close did not decisively recover above Thursday afternoon’s 1267.25 support, despite hovering there for the last half-hour. The bounce was purely a retracement  of the morning’s drop, and was not accumulative.

Buyers did not gain traction for their afternoon-long effort. But they did recover from probing under the prior week’s 1258.50 high. And that avoided signaling that the trend had reversed down.

The last test of 1258.50 support had recovered to new highs. Just revisiting the interim low afterward suggested the rally’s resumption needs a deeper or longer pullback. Closing under 1256.00-1258.50 would have signaled the rally’s trend reversing down. It still could, on Monday.

Measuring the rally either from Thanksgiving’s lows, or from the summer’s bottom, would determine a correction’s potential objectives. Two consecutive new high closes could avoid it altogether.

What’s Next… (Outlook and opportunities)
Simultaneously oversold RSIs at Friday’s 1257.75 low require its retest. Without first probing another new high, the low’s retest has a chance to hold as support. But its test would still target 1255.00. Under 1250.00 would signal a significant downleg underway. Back above 1272.50 could trigger a new upleg.[/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.