Trading Plan for 1/21

[pay]At the close (How the prior session ended)
Wednesday afternoon’s rally was signaled above 1128.00, and it extended back up to the morning’s 1134.50 bias-down target. This is the level whose break through 10:15 renewed the morning’s bias-down environment. Its recovery would have made a profound statement about the morning’s decline, and about the afternoon’s recovery attempt.

But 1134.50 was still being tested into the cash session’s final ticks. The morning’s selling pressure has yet to be invalidated. It still could be, so long as Wednesday afternoon’s rally isn’t rejected at Thursday’s open or close. But resuming Wednesday afternoon’s rally requires either gapping up at Thursday’s open, or quickly recovering a relatively shallow dip.

Pattern points (And technical influences)
It would still be surprising for a new downleg to being prior to probing new highs. They’re likely to be brief and shallow, and then to resolve in a downleg whose minimum objective would probe December’s lows. Wednesday’s lows came close – the closest, yet – to triggering the downleg. A retest of Wednesday’s lows Thursday probably won’t recover first, no matter what unfinished business remains outstanding above.

The rally’s resumption needs very little, only to recover and extend through 1137.00. It would be confirmed above 1141.75. Wednesday afternoon’s rally would be rejected back under 1130.00, and a new downleg would be in-play under 1128.00.

Bottom line (My underlying premise)
The econ calendar is relevant, and several high-profile earnings items are due. GS comes pre-open, along with AXP and various other Financials. Then more econ reports come after the open. New highs need not print by Thursday’s close, but they might not print at all if Thursday’s open can’t navigate higher.[/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.