Trading Plan for 2/3

[pay]Pattern notes.
A break under 813’00 Monday afternoon wasn’t expected to be easy. And it wasn’t even likely with too little time remaining to work through pre-open congestion. The13-point surge back to session highs at 827’50? Now, that was surprising. But it was still only noise.

The surge’s last 6 points were signaled as a short-squeeze above 821’75, which was retraced entirely by the close. That was the second confirmation the surge was all about refueling sellers. The first confirmation was that the morning’s high stopped the surge. The third confirmation would be a break under the 813’00 area that gave Monday afternoon’s sellers such a hard time.

Its break remains likely, along with at least an intraday retest of Sunday night’s “new Globex trend extreme” at 806’25. The only reason not to hold short overnight was the path being likely to include another bounce overnight. In fact, 830’00 was tested within 1 tick momentarily. Now back under 819’25 should put 813’00 back into play, and sellers back in control. Another probe above 827’50 would more likely extend the bounce.

Indicators and Internals.
A simultaneous negative divergence at overnight highs was responsible for a 9-point drop back to 821’75, where the cash session’s short-squeeze was triggered and then retraced. There isn’t any other unfinished business.

Tuesday’s opportunities.
The econ calendar remains active, with the morning’s reports spread out from pre-open through 10:00. Much depends on whether the reports are greeted from above 826’00 or from below 819’00 – and the first one or two reports might be needed to push the market beyond the range.[/pay]