Trading Plan for 2/18

Opening weakness was swallowed whole, and spit back out, by a recovery to new highs. But the new highs tested and held the next target. Buyers once again gained no traction for their effort. And this renews the same vulnerability to a morning drop.[pay]

Pattern points… (Setups and technicals)
Thursday is the second consecutive session to test its target early, and not improve further (circled green). Testing a target later in the day could at least be excused for less time remaining. But Thursday’s test of 1338.75 was early afternoon. Wednesday’s first test of 1333.00 was that morning, then later in the early-afternoon.

Price isn’t being attracted higher by unfinished business above newly created the prior day. Rather, new sponsorship is needed each day. At least Wednesday’s buyers were the product of Tuesday’s “ineffectual pessimism.” Thursday’s buyers were the product of an overnight dip.

This rally isn’t about attracting new capital,  or about converting bears to bulls. It’s somewhat about rotation, but otherwise mechanical and seasonal – with Friday’s expiration, and then the three-day holiday weekend.

What’s Next… (Outlook and opportunities)
Higher highs can’t be discounted. The next attraction above 1338.75 is 1348.75. It would be in-play if 1338.75 were exceeded through any relevant timing window. Back under 1334.25 would signal momentum reversing down. Confirmed under 1330.00, then next lower objective would be 1325.00.

This being a Friday – an expiration, no less – the morning’s bias signal is likely to persist through the noon hour. Trending underway early should extend into the afternoon. Similarly, not trending out of the open would be unlikely to trend before late-afternoon, or next week.[/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.