Trading Plan for 1/15

[pay]Pattern notes.
Wednesday’s last-minute price action avoided resuming the decline attempt. That didn’t shelter the market from its requirement to probe Wednesday’s intraday low, which had avoided being touched again. That changed after Wednesday’s close when the market slid to new lows.

Before the close I displayed an inverted Head & Shoulders pattern whose initial break could have been down. Its target area was a 3-point range at 826’25-828’25. So far, overnight lows have touched 828’25 and bounced back to the 836’25 level whose cash session break was needed to signal the decline still intact. Now it is valid resistance.

This constitutes a new low and its recovery. It doesn’t need to be repeated during Thursday’s cash session before a rally can begin. But that would doom the rally to failure, eventually. So long as S&Ps are nearer or below 836’25 and not much higher, a repeat of the low’s overnight probe would be expected. If so, we’ll be on lookout for that low to not hold.

Indicators and Internals.
Overnight extremes have taken 3-minute RSI to extremes. It hasn’t left any unfinished business that needs to be resolved, but it does reflect a willingness to provide action.

Thursday’s opportunities.
PPI and Jobless Claims highlight the econ calendar pre-open, followed by the Philly Fed survey after the open. The early data could spark selling that is saved by the later data. The later data could enhance trending triggered by the earlier data. But if there isn’t bottoming by mid-morning, this close to expiration and a three-day weekend, then a recovery would be less and less likely.[/pay]