Trading Plan for 2/4

[pay]At the close (How the prior session ended)
Wednesday afternoon’s narrow range, like the morning’s slightly wider range, did everything the market was supposed to do, and nothing it wasn’t supposed to do. That was the problem. The corrective bounce maxxed out at Tuesday’s highs, and sellers are marginalized through Thursday afternoon, so trending wasn’t likely.

The close also attacked the critical 1097.50 area. And like the afternoon’s prior attacks there, the 1097.50 area wasn’t touched. This reflects pessimism, which is potentially bullish from a contrarian perspective. In fact, S&Ps quickly recovered to 1098.25 at the Globex open.

Pattern points (And technical influences)
Wednesday’s gap down recovered briefly into positive territory. The balance of the session ranged in negative territory. That brief probe of positive territory disqualifies the session from being labeled ineffectual pessimism.

Recent highs around 1101.00 is likely to be probed at some point, probably Thursday morning unless the open gaps down under Wednesday afternoon’s 1092.00 low. And so long as the open doesn’t gap down so strongly, or above recent highs, Wednesday’s lows can be probed down to 1087.00-1089.00.

While the window re-opens Thursday afternoon for sellers to regain control, it’s not required. Especially since volatility often subsides ahead of the Employment Situation report.

Bottom line (My underlying premise)
A higher high Thursday may be obligatory for having traded mostly in negative territory on Wednesday’s inside day. But buyers weren’t put to much of a test, so their reward should be commensurate. The template being most closely tracked points higher initially, and then lower in the afternoon, but still without trending. [/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.