Trading Plan for 2/5

If Friday’s rally had ended like Monday’s decline… then the week would have begun by probing fresh highs. Instead, Friday afternoon’s fresh high was rejected through the close. Monday’s fresh low was not. Not until after the cash session close. But was that too late?

Pattern points… (Setups and technicals)[pay]
Friday afternoon’s bearish tell wasn’t matched by any bullish tell Monday. Its 1492.50 support did hold several tests, reacting up meaningfully. But not durably. And finally its test during the position-squaring window probed fresh session lows.

Just closing back under 1494.00 would signal at least a multi-session pullback underway. Monday’s last probe under 1492.50 extended down sharply enough, for long enough — and, equally important, early enough — to consider 1494.00 as having broken.

Just closing under the earlier tests of 1492.50 support would qualify as a hold-short setup. But while the cash session close equate to 1491.50, that didn’t prevent a post-close spike up to 1494.25. It doesn’t affect the setup, but it is understandably much more difficult to hold.

[/pay]What’s Next… (Outlook and opportunities)[pay]
If the post-close surge affects anything, it is the potential for extending higher. A “session-long rally” could have been signaled by gapping up above Monday afternoon’s 1496.75 high. That would have rejected the close’s bearish sentiment, but the post-close surge already did..Such a gap up could still extend to fill the gap back to Friday’s 1508.00 close. Otherwise, a second consecutive lower close Tuesday would signal a deeper pullback targeting 1467.00-1468.00. [/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.