Trading Plan for 1/9

If there were a knee-jerk reaction to FOMC Minutes… then Wednesday’s close could have been sharply higher, or sharply lower, instead of unchanged — unchanged from Tuesday’s close, which is also where the FOMC Minutes was greeted.

Pattern points… (Setups and technicals)[pay]
Tuesday’s 1831.25 close had been influential all day, even before Wednesday’s open. It was Tuesday morning’s bias-up target, and it was overlapped through each intraday timing window. It was also Wednesday’s opening print, and also overlapped through each intraday timing window, again. It was also Wednesday’s close.

Actually, it was Wednesday’s cash session close. Futures extended to 1833.00, fulfilling the 1829.00 buy signal’s minimum objective. That leg followed the afternoon’s dip to its 1827.25 target.

Recovering to either 1831.25 or 1833.00 recovered closing above it for a hold-long to be compelling. Those levels represent a 61.8% retracement back into the midday range. Until extending higher through a relevant window, that might be only a corrective bounce, and the drop to 1827.25 might have been only the beginning of a more substantial decline.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Back under 1830.50 would start to signal the corrective bounce was reversing down. Extending higher through Thursday’s open would invalidate the corrective bounce problem. But a similar vulnerability would appear at 1836.00-1836.50 or 1839.75-1841.00 — reversing down from either level could still launch a more substantial decline. But extending any higher would target 1856.50. [/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.