Trading Plan for 2/15

That was quite a day… during Tuesday’s last half-hour. A 10-point, 30-minute surge from intraday low to intraday high. It was quite a day before that, which is when real traction was gained. This, too, shall pass…

Pattern points… (Setups and technicals)[pay]
Tuesday’s late surge was clearly exacerbated by a perfect storm of  price, technicals, and timing. The afternoon’s 1337.25 bias-down target had been met twice within 2 ticks. RSIs were either making higher lows, or diverging positively, and the last half-hour can get silly.

Silly, or not, Tuesday’s late surge was a single leg. In other words, there was no relevant retracement until its peak. Since at least two prior highs were probed, there should be at least two uplegs. That leaves one outstanding.

For closing above the morning’s highs — regardless of still being in negative territory — buyers did gain traction for their efforts. Last-minute moves are less reliable, but for now that’s the premise. Assuming that the late surge isn’t reversed immediately, then the next high should touch at least 1351.75. Favorable conditions could extend up to 1353.75 or 1357.75.

Opening Wednesday back under 1343.00 would suggest Tuesday’s late surge was being invalidated, confirmed back under 1341.50 and 1339.25. All of which is possible, but not very likely without first trying to extend the late surge.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday’s close will be important for considering the Expiration Indicator and the 3-day Weekend Indicator. For example, closing above prior highs would tend to be bullish, while probing and rejecting fresh highs might be bearish. We’ll look more closely Wednesday afternoon.[/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.