Trading Plan for 1/8

[pay]Pattern notes.
Is this a bull market, after all? The reason I ask is not in spite of Wednesday’s 28-point drop, but because of it. Rather than spend time chipping away at Monday’s prior lows, Wednesday’s open gapped under them and extended sharply lower through the day. That’s pretty aggressive for having printed new trend highs just one day earlier. A bear market implies reversing to new lows. It also implies steeper slopes on uplegs than on downlegs. One day does not constitute a leg, so I’m not yet rendering judgement on this. But it’s something to monitor…

As for Wednesday’s drop, the session-long decline was signaled by gapping down under Monday’s prior lows. It was confirmed by maintaining the gap down. It wasn’t for lack of trying, just for lack of staying power. Session-long declines tend to be extended the following day – maybe only a little if the open gaps down, maybe a lot after a gap up fails to hold.

Indicators and Internals.
The overnight drop’s low bottomed when both 1-minute and 3-minute RSI diverged positively. The setup produced an 8-point gain that has now been retraced entirely. So far it’s still just noise in the range, but likely to probe the lower-end since oversold 3-minute RSI is at a new low along with price.

Thursday’s opportunities.
ADP’s numbers offered a glimpse into the reliability of employment data estimates. The price reaction offered a glimpse into the data’s relevance. I expect only a temporary reaction to Jobless Claims this morning with the duration tempered by a focus on unreliable estimates of tomorrows’ Employment Report.  Neither the initial reaction nor the reaction’s reaction are likely to be shallow, just brief, before the balance of the session becomes susceptible to ranging narrowly for through the afternoon. [/pay]