Trading Plan for 1/13

[pay]At the close (How the prior session ended)
Except for a little noise above and below 1128.25-1131.25, the afternoon only ranged sideways. The decline’s resumption was likely since the afternoon was a bias-down environment. Even after the bias-down had lapsed, during the last half-hour, the session low was attacked within 1 point (highlighted green).

It was too late for a short-squeeze, but price could still firm. In fact, the afternoon’s 1132.25 high was barely touched at the cash session close (circled red).

Fresh afternoon highs printed only after the cash session close (highlighted yellow), and then only back up to the noon hour’s high (red dashed line). Buyers expended energy without being rewarded for their effort.

Pattern points (And technical influences)
Tuesday’s open had gapped down, and consolidated between 1134.25-1137.75. This area’s lower-end was attacked at Tuesday’s futures close (circled green). Gapping up Wednesday above this area’s upper-end would give buyers traction and marginalize sellers. The gaps back to Monday’s 1143.00 close and its 1146.25 open, and the 1148.00 overnight high would all be in-play.

The alternative is to resume the decline. If Wednesday’s open isn’t gapping up or surging, then it’s probably tumbling. Gapping down under Tuesday’s 1128.00 lows would trigger a session-decline setup.

Bottom line (My underlying premise)
Last Monday’s breakout was always suspicious. Tuesday’s confirmation was minimal, and the delayed follow-through wasn’t trending quality. It was never considered durable. The peak may seem premature, but the decline seems pretty serious – last Monday’s breakout highs are already being tested (highlighted red). And there’s little below except several prior lows (underlined red) that can offer only temporary obligatory support. 2010’s gains might soon disappear if there’s no rally out of Wednesday’s open. [/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.