Trading Plan for 2/4

If you’re available Saturday morning… then please consider joining us for the weekly Saturday Strategy Session at 9:30am ET. Its link can be found in the blog’s sidebar.

Pattern points… (Setups and technicals)[pay]
Room for noise around the rally’s 1503.00 target up to 1512.75 was tested up to 1510.50 Friday. Narrow sideways ranging back down to 1506.50 through the afternoon never reacted down meaningfully, and never extended higher.

But it was nonetheless a new trend high close at 1508.00. Since trend’s tend not to end on Fridays, the new high close entrenches the rally, and all but requires at least one more new high close.

That doesn’t mean momentum remains intact. In fact, it suffered by entering the final hour back at the noon hour’s lows to reject the bias environment’s 1510.50 session high. This suggests Monday will be either a deep corrective dip before resuming the rally, or else begin a shallow delaying dip that precedes a better top. An immediate higher close remains possible.[/pay]

What’s Next… (Outlook and opportunities)[pay]
Trying to extend the rally higher before Monday’s open would not be surprising. It would also not be healthy from Friday afternoon’s narrow ranging that hovered at trend highs. The attempt would risk not only expending all available buying pressure, but also borrowing heavily from future buying pressure, which rarely works out well.  [/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.