Trading Plan for 1/19

Extreme volatility before Wednesday’s open… was repeated intraday, probing either end of the wide overnight range. The probe above its upper-end gained traction, and extended higher. And if not rejected immediately Thursday, then…

Pattern points… (Setups and technicals)[pay]
A retest was required of Tuesday’s pre-open 1302.50 “new Globex trend extreme.” Its retest was likely to visit 1305.00, too. But 1305.00 was only met within 3 ticks.

That’s close enough to take a sell signal if triggered. Speaking of which, I calculated one at 1302.00, which was pierced repeatedly by 1 tick. It never broke lower, but its reaction has not recovered to fresh highs. A break under 1302.00 overnight would still be valid.

1302.00‘s break overnight is needed to invalidate a couple of buy signals. One is the close above 1296.00, which puts into play a test of 1311.00. More influential is close above prior highs on Wednesday of expiration week, which would dictate trending up into and out of the weekend. That would be likely to exceed 1311.00.

1296.00‘s recovery can be invalidated by maintaining an open back under it Thursday. Wednesday’s Expiration Indicator can be rejected by opening under a prior low like 1295.00 — but under 1292.00 would be clearer. A post-open bounce could still fill the gap back to Wednesday’s 1303.50 close, which would form a more durable top.

Any shallower opening weakness, or none at all, would be bullish for extending the rally higher. A deeper dip Thursday afternoon would still be possible, but it would likely resolve up to new highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Be sure to note that the Expiration Indicator tends to predict Friday afternoon and Monday morning price behavior. Price action between now and then may differ from the signal. [/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.