Trading Plan for 1/14
[pay]Pattern notes.
They threw a lot at support Tuesday, but it didn’t break. The overnight bounce’s failure, its probe under Monday’s lows, the mid-day bounce’s failure and its probe of lower lows. Sellers certainly didn’t gain any traction for their efforts, but that doesn’t default to being bullish. At least, not for that reason alone.
A close above the morning’s high would have been bullish. A solid close in positive territory could have been bullish. Instead, the optimism was ineffectual despite preventing the decline’s resumption. Tuesday’s close back at the 866’00-868’00 area could be made bullish by gapping up Wednesday above 873’00-874’00. At least the 880’00 area would be targeted, and potentially last week’s highs.
Another test of 860’00 support couldn’t hold yet another retest after chipping away its support so thoroughly Tuesday. Of course, Tuesday’s third or fourth test should have given way already. If it does give way, then 853’50, 847’00 and 841’00 would be in-play. The oncoming three-day weekend makes this renewed downleg more difficult if not underway by Wednesday’s close or Thursday’s open.
Indicators and Internals.
RSI became agonizingly complacent as Tuesday morning’s consolidating wore on. It was very easy for the first bit of selling to produce an oversold reading. It was also easy for a second test of 860’00 support to produce a positive divergence. But the afternoon action settled gravitated back towards complacency, so the next trending attempt will need to be productive (i.e. break beyond a prior high or low) to avoid losing traction.
Wednesday’s opportunities.
Several econ report are due pre-open. Early trending attempts might be difficult to maintain since Beige Book is due at 2:00. Anxiousness ahead of this item tends to paralyze price action. That’s getting to be less reliable in a negligible interest rate environment where everyone knows that the Fed isn’t considering a rate hike. So a gap up above prior highs would probably get a benefit of the doubt for starting a corrective bounce going into the weekend. In case sellers are back at it, a bigger drop to lower targets could find Beige Book bailing out buyers.[/pay]