Trading Plan for 1/28

It’s a game of chicken… Breaking Wednesday and Thursday’s 1291.00-1296.00 range will produce the next 15 or 30 points of trending. The open’s surge to 1298.00 and its afternoon twin reflect buyers making their move. But reversing back into the range only reveals the weakness of their sponsorship. Is it time for sellers to take a turn?[pay]

Pattern points… (Setups and technicals)
1296.00 resistance deserved to be probed at least momentarily for all of its testing Thursday. So it was probed. Twice. Neither probe came during a relevant timing window, when buyers could have gained traction. So each probe was retraced.

This is a clue that the market has been distributing. Buyers are undermining their own efforts by expending energy when it can’t be effective. The last chance to prove otherwise may be Friday morning, by extending higher without retracing.

Emphasis on that last part about not retracing. This being a Friday, the morning’s bias is likely to extend through the noon hour. That would not be a false breakout. So, another new high’s quick failure could be the rally’s last straw.

Sliding through 1291.00  would indicate the consolidation has been distribution. and it would leave no unfinished business above. Its support has been chipped away enough to make its break likely if tested again. It may be unavoidable if Friday’s open isn’t already rallying.
What’s Next… (Outlook and opportunities)
Overnight action is attacking 1291.00 support. This may be bullish, being too much selling pressure, too soon. Recoveries previously this week weren’t worried about the weekend’s fast-approaching illiquidity. But that would require a recovery before the open. [/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.