Trading Plan for 1/3

Have a safe and Happy New Year’s… I’ll see you back here after the weekend!

Pattern points… (Setups and technicals)[pay]
1256.25‘s bounce target was still being tested at Thursday’s close. It was also overlapped at almost every one of Friday’s first-hour checkpoints. Its magnetic attraction was established, and even normal volume would have been unlikely to trend away.

Friday’s low-volume session didn’t stand much of a chance.

Eventually, a sudden, steep and relatively substantial drop from 1256.25 probed the overnight lows down to 1252.50. The low’s oversold RSIs helped to launch a bounce, but also required a retest of the 1252.50 low — preferably to also test 1251.00. A dive to 1250.75 into the cash session close neutralized these attractions below.

Unfinished business below would have kept alive the bearishness through the 3-1/2 day weekend. Fulfilling the targets, and holding their support, does not. So, the market will make a big decision when the New Year begins:

Either Thursday’s bounce was corrected Friday so a bigger bounce could begin, probably by gapping up above a prior high like 1258.50, targeting fresh highs up to 1263.00. Or, Friday’s dip will continue unwinding Thursday’s corrective bounce, back to Wednesday’s 1247.50 “lower prior highs,” probably also filling the gap back to Wednesday’s ~1245.00 close. Exceeding either objective above or below would likely trend in that direction.

Regardless, Tuesday’s resolution could very likely set the tone for January — similar to an old mainstream axiom that rarely holds true anymore, but may yet be operable this year.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Globex opens Tuesday at 6:00am ET. We’ll have an idea from international exchanges before then what kind of open is in store. Post any questions to this post’s comments section in the blog.[/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.