Trading Plan for 2/14

If you’re only now thinking of shopping for Valentine’s Day… then you’re too late. Almost. If the market is intending to reverse down into the weekend, then it is not too late. Yet.

Pattern points… (Setups and technicals)[pay]
Wednesday afternoon’s drop exited the no-bias environment under the noon hour’s 1515.75 low. And the final hour was entered under the bias environment’s 1514.75 low. That meant sellers were in control — not necessarily that a downleg was extending, only that a bounce would be controlled by sellers. In fact, a bounce from 1513.00 barely missed touching a buy signal 3 points higher at 1515.75 before the 3:10-3:20 timing window lapsed.

A later bounce extended up to 1518.00. If sellers were in control of it, then Thursday’s open should resume the decline. The bounce peaked before retracing Wednesday’s last downleg, which is as high as it could get while still being considered noise. And it stopped short of recovering Tuesday’s 1519.00 high. Having rejected the morning’s new high, at least buyers were prevented from regaining traction.

But there is also the WedEx (Wednesday Expiration Indicator). Rejecting the probe above only Tuesday’s high isn’t enough for this indicator to be bearish. And recovering from an intraday probe under “lower prior highs” at 1515.00 “lower prior highs” is passively bullish. The signal would benefit from clarity offered by Thursday’s open’s trending or gapping through a prior high or low, 1511.00-1519.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Since last Friday’s “breakout” that wasn’t, price has only drifted higher instead of trending. That’s the consequence of not gaining traction, but extending higher anyway. Looking back at the numerous starts and stops and reversals, all within narrow intraday ranges, should be self-explanatory. This situation can persist indefinitely, extending up to 1533.00 without ever putting it into play. This sort of behavior is endemic of late, late, late stage trending. The trend can be renewed by taking the inevitable plunge, first. [/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.