Trading Plan for 1/17
If Wednesday’s action dictated a bearish WedEx indicator… then would that preclude the market from probing fresh highs before Friday? No, but it would make a probe of fresh highs likely to fail. Of course, WedEx wasn’t actively bearish. And the more passively bearish it was Wednesday, the easier it is for Thursday to turn it bullish.
Pattern points… (Setups and technicals)[pay]
Sellers failed again Wednesday morning to gain traction, making a probe of fresh highs increasingly likely. Wednesday afternoon’s rally attempt was so similar to Tuesday that it is surprising they resolved the same way.
Each had recovered from the open’s gap down. Each had tested and held its upside objective (1467.75 and 1468.50, respectively). Each had probed slightly above prior highs. Their similarities gave Wednesday’s attempt an edge, since similar patterns that appear consecutively tend to resolve differently.
But Wednesday’s 4-point reaction down from 1469.00 pulled back from testing prior highs. These repeated probes of resistance are chipping away at it. At least an obligatory higher high remains likely intraday. Regardless of whether it can be maintained.
This week’s WedEx indicator is passively bearish for having rejected a probe above prior highs. That can become a late actively bullish indicator if Thursday’s close were above all prior highs. Extending Wednesday’s last-minute slide to gap under prior lows would make the signal actively bearish. But also late. And late signals are easier to invalidate.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Probing fresh highs Thursday would not be inappropriate for an actively bearish WedEx indicator. Closing higher would be. Closing higher — above all prior overnight highs up to ~1471.25 — would undermine Wednesday’s passively bearish WedEx, if not make it actively bullish. Reversing back into negative territory from fresh highs overnight could be the most bearish setup.[/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.