Trading Plan for 1/28

If not for the added pressure of poor earning surprises… then Monday night”s decline might have begun recovering before the open, and extended higher intraday from there. That extra push lower has now been retraced after hours by the reaction to AAPL”s earnings. Perhaps the downside was a tad overdone.

Pattern points… (Setups and technicals)
Because Tuesday afternoon did not probe under the morning”s low before reversing back into the earlier range, the session”s pessimism can”t be labeled as “ineffectual.” Because the afternoon did probe ABOVE the open”s high before reversing back into the earlier range, the session”s pessimism was effective.

Tuesday”s entire session was spent in negative territory. Extending down any deeper through Wednesday”s close — not just through its open — would make a retest of two-week old lows the next likely objective.

But Tuesday”s pessimism can still be invalidated.

The last hour”s break under its 2032.25 sell signal fulfilled its potential down to 2023.00. That held through the close. It was recovered to 2031.00 through the cash session close (and then extended to fresh highs at 2039.00 in reaction to AAPL”s earnings). 

Extending overnight to gap up Wednesday above at least 2041.00 would establish a pretty solid base, having retested Sunday night”s low, and absorbing Tuesday”s gap down. Exiting the open above 2044.00 would be optimal. By the same token, Tuesday”s action chipped away at support, and not rallying from it quickly would be vulnerable to probing lower.

What”s Next… (Outlook and opportunities)
Wednesday afternoon”s FOMC policy statement might inhibit trending after late-morning, or encourage a retracement of trending already underway.