Trading Plan for 2/18

If a pullback appears now… then it’s probably only a temporary correction on the way to new highs. The past week’s rally already had retraced too much of the decline to be only a correction. Now Friday’s follow-through has confirmed.

Pattern points… (Setups and technicals)[pay]
The Friday factor kept the path clear for extending higher into the three-day holiday weekend. A second consecutive higher close confirmed Thursday’s break above the 1818.00-1819.00 maximum correction level. The last hour’s 5-point reaction down from 1838.75 held a 61.8% retracement of the afternoon’s upleg.

It all sounds pretty bullish, which it is, but not necessarily without first dipping to refuel buyers. Friday’s final hour was entered above the bias environment’s high, and both were above the noon hour’s high, which all but requires at least probing higher highs.Greeting the new week by gapping on extreme sentiment to test 1842.00 could prove to be a sentiment extreme that reverses back down intraday.

Gapping down would have room down to 1828.00 or 1823.50 while still needing to eventually fill the gap back to Friday’s 1835.00 close. Recovering to resume the rally would be required under any specific timeframe.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This being a holiday weekend, there is no Saturday Strategy Session. Friday’s Market Wrap was extended to include a discussion of the bigger picture.[/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.