Trading Plan for 1/24

Don’t forget about tomorrow morning’s Open House in the chartroom. Saturday at 9:30am ET.

Form trumped function, Friday.  My template for the session expected a morning rally and afternoon decline. The morning rallied and the morning also declined. The afternoon ranged sideways.Second time’s a charm?[pay]

Pattern points… (Setups and technicals)
The decline expected Friday afternoon was a victim of its own success. The open’s gap up expended so much buying energy so quickly, that it had little to sustain itself for very long. Shifting the decline forward into the morning may have been too early for sellers to be properly refueled.

Another downleg is likely to be attempted. The overnight pattern (Descending Triangle) is incapable of launching a durable rally. And delaying its retracement this long makes it likely to be a reversal more substantial than the rally it produced.

But now there is potential to bounce again, first. If Monday’s open isn’t already declining, then its detour to another bounce will be underway. A temporary bounce that seems optimistic – as did Friday’s open – but that ultimately honors the trend change signaled by Wednesday’s close under 1286.50.

What’s Next… (Outlook and opportunities)
Sliding or gapping down under 1277.00 would target Thursday night’s 1273.00-1274.00 lows. Their break would next target 1257.00-1258.50. Not declining at Monday’s open would allow the influence of attractions above: The open’s 1285.00 gap up, the overbought 1-minute and 3-minute RSIs at the 1288.00 high. Presumably also 1289.00-1290.00.[/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.