Trading Plan for 1/6

That was quite a bullish day Wednesday. Was it really? It was a very bullish morning, recovering into the open from an overnight drop, and trending up into the noon hour. But the afternoon only ranged sideways. And probes of higher highs failed to gain traction. [pay]

Pattern points… (Setups and technicals)
The afternoon’s narrow ranging had extended the noon hour’s narrow ranging instead of trending out of it. This made the third consecutive timing window likely to range narrowly, and it did.

The fresh high was largely contained within the 3:10-3:20 timing window. Prior highs were probed into the window, and the probe was rejected coming out of the window. That’s rarely the high. But it’s often the second-to-last high.

Having retested Monday’s high, there is no unfinished business above. And an entire afternoon was just spent probing the prior high without extending higher. If these conditions can’t launch a decline, then the rally’s next objectives are 1279.00 and 1281.00.

What’s Next… (Outlook and opportunities)
At least a momentary fresh high Thursday morning is likely. Reversing quickly back under 1271.00 would target 1266.50, and potentially 1263.00, whose break would reverse the trend down. That’s a lot of support, and a credible attempt would be aggressive. Otherwise, the rally would gain traction from fresh highs Thursday morning that aren’t quickly reversed.

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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.