Trading Plan for 1/31

If Thursday’s buyers were strong-handed… then they either would have been more patient, or more forceful. Instead, they tested resistance quickly, but failed to exceed it when it mattered. That’s impatience. No wonder futures could plunge 8 points in reaction to AMZN earnings.

Pattern points… (Setups and technicals)[pay]
Thursday’s rally extended through relevant resistance levels too late to be reliable for trending up throughout the day. Too late, but not too shallow. The morning’s 1284.25 bias-up target was tested through the open, but wasn’t exceeded when the could have put into play higher targets. The afternoon’s 1792.50 bias-up signal was attacked at the noon hour’s beginning, and tested at its tend, but also avoided triggering.

That’s a lot of buying pressure to expend, without gaining traction for the effort. And it wasn’t a matter of lacking buying pressure — the levels were exceeded, later. But not when exceeding them would have created higher attraction above.

The bias environment tried resuming the rally after dipping to 1786.50. It was retraced back to 1792.50. Resistance pushed back again, back down to 1786.50 into the close. And lower out of it, finally fulfilling potential to 1785.25.

That would have been a plausible bottom if tested during the bias environment. Instead, bouncing into the final hour trapped more longs. They ran for the exits in reaction to AMZN earnings post-close, triggering an 8-point plunge testing the pattern’s likelier objective under 1782.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Sellers gained no traction Thursday despite the late plunge, since it came post-close. But buyers gained no traction either, since the cash session closed under the noon hour’s lows. Gapping up Friday above the noon hour’s 1793.75 high may be the only possible path up without first probing lower. An opening test of 1788.00-1791.00 can still reverse down.[/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.