Trading Plan for 1/14

If the rally’s target is valid… and holding it as resistance both Thursday and Friday suggests as much, then must a downleg appear without delay? No, and one might not appear at all before a consolidation regroups to launch a new rally leg. All that can be precluded at this point is extending higher without delay, which would be likely to fail.

Pattern points… (Setups and technicals)[pay]
The rally doesn’t have much going for it. Not anymore. There is still no unfinished business above, as has been the case since Thursday’s close. The 1464.25-1465.50 target held again. The overnight new high has no complexity that might make it a “New Globex trend extreme” requiring intraday retest. And not closing at a new trend high Friday removes the downside protection that last Friday’s new high close had enjoyed.

One thing the rally does have going for it is the lack of a downleg. Sellers had an opportunity Friday to start one, and failed. The failure wasn’t very stunning, as failures go. For instance, no rally developed in its place. Anyway, Fridays are difficult to generate sponsorship for trending.

So, the rally’s momentum may be done, but a downleg hasn’t yet started. Until then, the rally may find new momentum, but probably by rejecting a dip. This introduces the caveat that a false break either way is possible — indeed, being a Monday, gapping in one direction often reverses more sharply in the opposite direction.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget to join us for the Saturday Strategy Session. Its link is in the blog’s sidebar, and the discussion begins at 9:30am ET. After focusing on the market, you’ll be welcome to request instant analysis of any stock charts currently interesting you.[/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.