Trading Plan for 1/12
[pay]At the close (How the prior session ended)
Monday morning’s 1143.00 bias-up signal had been recovered overnight and then tested as support through the open. A rally from 1137.75 had recovered up to 1144.25, and Monday’s close was testing 1143.00 again.
So, Monday’s close was in positive territory. This followed dips into negative territory that tested Thursday and Friday’s “lower prior highs.” Despite having expended a lot of energy intraday, sellers did not gain traction for their efforts.
Pattern points (And technical influences)
Decisively recovering 1143.00 would have all but ensured the recovery of any overnight dip. This is similar to Thursday’s close above 1134.50 that predicted Friday’s pre-open dive would be recovered. Not decisively recovering 1143.00 made at least a dip likely.
In fact, Alcoa (AA) earnings after the close triggered a drop to 1139.50. This was the afternoon rally’s original buy signal. It can be probed by 1 point down to 1138.50 without sellers gaining traction.Gapping down Tuesdsay would create unfinished business back up to Monday’s 1143.00 close. There is already Monday’s opening gap up at 1146.25, and the 1148.00 overnight high’s “new Globex trend extreme.” Even the “higher prior lows” overnight around 1145.00 could stand to be retested – it is odd for a recovery to come so close, and yet peak without touching it.
Bottom line (My underlying premise)
After so deep of a pullback, recovering Sunday night’s 1148.00 highs would be unlikely to stop there. I define the overnight high’s actual range as 1145.00-1147.00, and gapping up above its upper-end could fulfill the 1157.00-1159.00 target intraday. Retesting Monday’s 1138.00 area lows during the open should still recover. If not, then a significant top may have already formed.
PROGRAMMING NOTES: Apparently there was an automated dismissal based on attendees inactivity. Its setting was entirely too brief for our purposes. It is now set to 18 hours… The Morning Market Tour download is quite lengthy, and will be for at least another week. Meanwhile, we’ll limit the recorded portion to only S&Ps. [/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.