Trading Plan for 1/7

If Tuesday”s low isn”t THE low… then THE low is much, much lower. Perhaps a brief, compartmentalized probe of fresh lows could still be absorbed. But not rallying Wednesday afternoon could be because the decline is already extending.

Pattern points… (Setups and technicals)
Having broken lower Monday under the decline”s minimum 2040.00 objective, lower sub-2000.00 targets were put into play. But, first, a bounce had room up to 2022.50 or 2029.00. Only the lower bounce target was tested — first overnight, and then at the morning”s 2023.25 bias-up signal.

The sub-2000.00 targets were 1994.00 and 1983.50. Tuesday”s low came within 3 ticks of 1983.50, which suffices. After bouncing to 2010.00, Tuesday”s close dipped back to 1994.00. The decline”s targets were thoroughly tested, and held.

Tuesday morning”s drop under the morning”s 2011.50 bias-down signal was inappropriately timed. That required its eventual retest, regardless of having probed 27 points below it. Recovering it to within 6 ticks does not suffice. So, 2011.50 remains “unfinished business above” to help attract price higher.

Shallow bounce, targets fulfilled, unfinished business above. If that combination can”t launch a rally Wednesday, then a much deeper decline is probably underway. Much, much deeper.

What”s Next… (Outlook and opportunities)
Focus is turning to Friday”s Employment Situation report. Not  We”ll get a glimpse of the market mood with Wednesday”s pre-open ADP report. Tuesday”s session initially reacted positively to weak economic reports, so I”m assuming that template still applies.