Trading Plan for 1/30

If not for Turkey’s interest rate surprise… then Wednesday afternoon’s sellers might have been absorbed. Morning probes of resistance would have created more room to absorb afternoon selling pressure. But the morning didn’t bounce very much. So holding its low only suggests too much optimism, and not that sellers have been absorbed.

Pattern points… (Setups and technicals)[pay]
The 1765.50 objective was tested in reaction to the FOMC news. Its reaction up retraced all the way back to its prior high at 1777.75. That’s not an arbitrary bounce. So, not extending that higher was itself bearish. But reversing all the way back down to 1765.50 — which was already tested, and already influential — suggests that buyers are weak-handed.

In fact, the morning’s test of 1765.50 stopped short of touching Monday’s low. That is optimism, which is inappropriate at a bottom. The afternoon’s drop stopped optimistically short of touching the morning’s low. This is all potentially bearish from a contrarian perspective.

All of which is developing back at December’s last relative low, which formed into and out of another FOMC announcement. I’ll leave it to others to tell us what that might mean fundamentally. Its technical relevance is only coincidental. But that is a prior low, nonetheless. There is no bullish reason to revisit it after the interim rally. After a fourth session probed lows of the prior three-day ru, not rejecting immediately Wednesday’s drop would all but confirm a new downleg underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
While 1765.50 is the relevant support, and breaking lower is now just a formality, one more intervening bounce is possible. Not likely, but possible. And it would begin by gapping up. So, not gapping up would be bearish.[/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.