Trading Plan for 1/6

If Monday afternoon”s low had printed earlier… then its reaction up would have been early enough to attract counter-trend sponsorship for short-squeeze. Was the decline just trying to squeeze out remaining weak-handed sellers?

Pattern points… (Setups and technicals)
Last week”s three-day decline stretched to four days on Monday. And not by just a little. 

Friday”s test of 2040.00 support had retraced 38.2% of the two week-long 1964.00-2089.00 rally from Dec 16. The retracement extended to 61.8% when Monday”s low tested 2011.50. 

But the 1-2 punch of reacting to both 38.2% AND 61.8% retracements should be only temporary — if at all. A corrective bounce would likely peak at either 2022.50 or 2029.00 (probably the higher, since Monday”s late bounce came within 2 ticks of its 2020.25 bounce potential).

Reversing down from there, or simply extending down without delay, would next target 1994.00 and potentially also 1983.50.

The decline from last week”s highs is still likely just temporary. So, after extending down — or by somehow extending an immediate bounce above 2029.00 to avoid extending down altogether — there remains potential to fresh highs.

What”s Next… (Outlook and opportunities)
The weekend was book-ended by two potential short-squeeze setups. Neither fully materialized. That doesn”t preclude the morning crowd from trying what the afternoon crowd can”t do. Overnight gains that aren”t retraced through the opening 15 minutes of volatility should improve through the morning. But not rallying at the open would more likely extend the decline.