Trading Plan for 1/20

[pay]At the close (How the prior session ended)
Tuesday ended with a sudden spike up out of the afternoon’s narrow no-bias range. It stopped at 1147.00, just 1 point under the as-yet untested Globex high. Coming that close without actually touching the higher highs is pessimism. More so now, being the second time. From a contrarian perspective, it helps to ensure a probe of new highs.

Pattern points (And technical influences)
Tuesday morning’s late bounce in a no-bias environment was designed to absorb the brief selling pressure that preceded the noon hour. Perhaps Tuesday’s late breakout had similar intentions. The Globex open plopped back into the afternoon’s narrow range, and has since held steady. The drop was stopped in its tracks at the afternoon’s 1143.75 bias-up signal, which is now support.

RSIs had diverged negatively before the close. The post-close dip down to 1143.75 was sufficient to satisfy it. But there is room down to 1141.00 before sellers start gaining traction.

RSIs were oversold at Tuesday’s pre-open low. It happened within full view of the intraday crowd, so its retest is almost required. The low was a test of 1126.00-1126.50, and a re-retest the 1130.00 lows. Prematurely abandoning yet another attempt at new highs would be very odd. But another test of the lows would be very likely to break lower.

Bottom line (My underlying premise)
Tuesday’s post-close dip was a delayed reaction to IBM’s earnings. More earnings and and econ reports are due Wednesday morning. Similar reactions would fit nicely into my theme for the New Year’s breakout. Its follow-through should be be relatively shallow, and then reversed back down through December’s lows.[/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.