Trading Plan for 2/21

If Wednesday night’s drop were done intraday… then Thursday would have extended down considerably. Just retesting its lows Thursday morning would have been bearish. We knew all week that testing that level at any other time would be bearish, so we knew after Thursday’s open to be bullish.

Pattern points… (Setups and technicals)[pay]
Now we get to see just how bullish. The bearish WedEX says that any remaining upward momentum should be expended before Friday afternoon. That doesn’t require extending above Thursday’s highs Friday morning, only not beginning to drop that early.

A lot can be done in that otherwise limited time frame. Consider what Thursday morning’s bias environment accomplished, bouncing from 1822.00 to its 1832.75 objective, and higher. Testing the 1856.50 objective is a little more demanding —  okay, a lot more demanding — but it’s an attraction.

Overbought RSIs at Wednesday’s 1844.50 high are an attraction, and likely to be tested if Friday morning were to probe at all above Thursday’s 1840.25 high. Regardless, any buying pressure not expended before the noon hour’s end probably won’t be expended until Monday afternoon.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Being expiration, trending through the opening 15 minutes would be likely to extend in that direction through the day. This influence will have to fail if a fresh high in the morning is going to be sold-off into the close. That, or a fresh high will have to come along grudgingly, and not immediately, which would be unlikely to probe much higher before bearish influences take hold.[/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.