Trading Plan for 1/22
If this is a holiday weekend… then there isn’t a Saturday Strategy Session. Don’t hesitate to ask any market questions in the comments section of this post on the blog. Chartroom will be open Sunday evening at the Globex open. I’ll update the blog in case of any relevant price action.
Pattern points… (Setups and technicals)[pay]
The WedEx “late actively bullish” indicator was vindicated by Friday’s expiration afternoon trending upward. Closing above 1474.25 for the second consecutive session confirmed Thursday’s breakout. Closing positive above 1476.00 helped to confirm. The setup all but requires a third higher close, not necessarily consecutive.
There is a potential problem. Closing above Thursday’s 1480.50 high would have helped to confirm, too. Not even touching it would have made its test all but irrelevant, but Friday’s late surge couldn’t help but probe it up to 1481.00. Perhaps it was only expiration noise, but still testing 1480.50 at the close does undermine the confirmation of closing above 1474.25-1476.00.
Regardless of being undermined, the breakout and confirmation get a benefit of the doubt, unless rejected immediately. So, what constitutes “immediately” on a three-day holiday weekend? This is rarely encountered, but gapping down under Friday’s ~1470.00 low would qualify.
Speaking of Friday’s lows… the morning’s dip was attracted down to the prior intraday 1468.00 area “lower prior highs.” The dip to 1470.50 only tested prior overnight highs at ~1471.25. Their retest should find an air pocket that fills the gap back to Wednesday’s 1466.00-1467.00 close.
[/pay]What’s Next… (Outlook and opportunities)[pay]
If the breakout is valid, then 1503.50 is in-play. Having been undermined, perhaps the breakout will produce only one more higher close before failing. Either scenario should play out aggressively, whether extending to the next objective, or else rejecting it to launch a new downleg. [/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.