Trading Plan for 2/8

Tuesday’s highs fulfilled a big target… Probes of prior lows were rejected at the last-minute (actually, after the last-minute) to get there. All that buying pressure, all that intent. And yet, the big target held as resistance through the close. It’s not quite a sell signal, but… tick, tock.

Pattern points… (Setups and technicals)[pay]
The potential to 1343.00-1345.25 was fully tested Tuesday. And it defined session highs. Testing the range’s lower-end coming out of the morning’s bias environment launched a sideways range that essentially persisted through the close. Its upper-end was touched just before the close.

1343.00-1345.25 wasn’t even going to be retested — let alone test its upper-end — except that a funny thing happened on the way to probing fresh afternoon lows under 1341.00: a 4-point surge. But it originated too late to gain traction, and the cash session close equated to 1343.00.

Probing fresh highs during the 3:10-3:20 window, and also reversing the probe by 3:20, suggests that buyers are weak hands. That’s not a sell signal, except that it makes a retest likely of the 1341.00 prior low. Breaking under the prior low after rejecting a fresh high would be a sell signal. Under 1336.00 would confirm.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The rally may yet extend higher. Two consecutive higher closes above 1343.00 would put into play 1371.00. But the pattern is unlikely to maintain this level without extending higher. So, not extending higher without delay — or not quickly rejecting a corrective dip to 1336.00 — would be bearish.[/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.