Trading Plan for 1/19

A lot of buying energy was expended Tuesday. Pre-market news items were no match for post-open buyers. But that’s a lot of buying pressure to expend without gaining traction until the cash session close.[pay]

Pattern points… (Setups and technicals)
The 1293.00 pre-open high’s retest remained likely so long as sellers didn’t gain traction Tuesday. It was met on the way to fulfilling the morning’s 1293.50 bias-up target. Both were tested after the cash session close, but their timing doesn’t matter.

However, timing does factor into whether 1291.25 was exceeded on a closing basis. It was not, as it was still being tested within 3 minutes of the cash session close. Exceeding it would have meant buyers gained traction for their efforts. They did not. That could be a problem.

Post-close action extended higher to 1296.25. This compounded the risk, stretching the rubber band without first getting a good grip on it. This isn’t the sort of pattern to suddenly put in a durable top. And a morning drop is unlikely if not already underway at the open. Not snapping back at all Wednesday would next target the 1310.00 and potentially 1321.00-1324.00 areas.

What’s Next… (Outlook and opportunities)
Buyers expended a lot of energy overnight, and then after the cash session close, both times when it couldn’t gain traction. Opening under 1289.00 would signal momentum reversing down, but only if maintained through the open. Any lesser weakness – presumably down to 1289.25-1290.25 – would likely be absorbed.   [/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.