Trading Plan for 1/11
[pay]At the close (How the prior session ended)
Better late than never? The impending weekend can influence Friday afternoon price action, and this weekend did so, too. Whether extending or retracing the morning’s recovery, the attempt would be sudden and steep. And substantial, too, if the attempt were underway coming out of the noon hour.
The Employment Situation report’s negative reaction had been recovered, in-line with expectations. The trending attempt waited until Friday’s last half-hour, leaving little time to be substantial. But it was sudden and steep. Perhaps the 4-point surge can be considered substantial, relative to the post-open, 3-point, uptrending channel.
Regardless, the late action was a short-squeeze, which is fueled by weak-handed shorts covering. The sellers may have distributed over the course of several days, but didn’t have the wherewithal to outlast the weekend.
Pattern points (And technical influences)
New extremes on Friday are very very rarely a trend extreme. Some higher high is likely, even if there is first a pullback. And a pullback is possible, especially when the new trend extreme is the product of a last-minute breakout.
The alternative is not to resume ranging sideways – if a gap up doesn’t reverse down immediately, then it is likely to extend higher through the morning. Monday’s breakout was barely confirmed, and slow to extend. But it is now trying to extend. The delay may be foreshadowing a poor reception at the next target.
Bottom line (My underlying premise)
Recovering 1143.25 would help to confirm the next target is 1157.00-1159.00. Failing a probe or a gap above it would put the rally on hold for a pullback, if only through Monday morning, so long as no prior low is broken.
PROGRAMMING NOTE: The chartroom is now linked here. It is compatible with Windows 7 and Apple Mac operating systems. We can switch back to the previous platform at a moment’s notice. Let me know ASAP of any difficulties or irregularities you perceive.[/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.