Trading Plan for 2/1

Monday’s weak-handed recovery… didn’t prevent Tuesday’s substantial gap up. It just doomed it to failure, a 15-point reversal through the morning. Did it also doom the afternoon’s recovery attempt?

Pattern points… (Setups and technicals)[pay]
Like Monday’s bounce off of the morning’s lows, Tuesday afternoon’s recovery attempt peaked upon testing the 1308.00-1309.00 area again. And the peak came early during the afternoon’s bias environment, again. Also, 1308.00-1309.00 was probed only briefly, attacking 1310.00. Again.

Another weak-handed bounce? Not necessarily. Gapping up above 1311.00 could extend higher to test 1316.00, and possibly attack 1321.00.

But buyers still have not gained traction. An attack on 1299.50-1301.00 would be likely by any dip under 1304.50. And almost any lower would resume the drop with potential to 1285.00-1286.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
1304.50‘s test is already likely since 1306.75 is being probed after the cash session close. If Monday’s lows are probed, then support at 1294.00 might interrupt the decline. Regardless of whether 1304.50 were actually tested, almost any initial strength above 1309.50 would be credible for extending higher.[/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.