Trading Plan for 1/27

[pay]At the close (How the prior session ended)
Tuesday’s last hour extended the prior two hours’ drop from session highs at 1100.00 down to 1087.50. But the last hour’s pace was much more aggressive, more than doubling the prior two hours’ drop in half the time.

A last-minute bounce to 1091.00 originated too late to be accumulative. The low’s retest was all but required. The drop resumed before the cash session close, and probed fresh session lows down to 1086.50 before the futures close.

Pattern points (And technical influences)
The 1081.00 overnight low was barely threatened. Its retest is almost historically mandated for being a “new Globex trend extreme.” A break under 1087.00 would have signaled the afternoon’s leg was on its way there.

1087.00 held a test at the close. Delaying its test or breaking it decisively would have made a test of 1081.00 unlikely to recover. Its test is still likely, and its test could still resume the decline. But having held one test, recovering 1087.00 after testing 1081.00 would trigger a sizable bounce.

Lower lows would next target 1074.00-1075.00 and then 1064.00. A gap open above 1100.00 Wednesday would trigger a corrective bounce, but wouldn’t avoid eventually resuming the decline.

Bottom line (My underlying premise)
Wednesday morning’s news environment is dominated by earnings announcements, and none of them very high-profile. After the 10:00 econ report, if no new targets are in-play, things might slow down before the afternoon’s FOMC news. Regardless of its knee-jerk reaction, greeting the news at or around a new trend extreme tends ultimately to extend the trend.[/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.