Trading Plan for 2/24
[pay]Pattern notes.
I was willing to turn bullish near-term had Sunday night’s open not behaved poorly. It did, briefly, until Citi’s news pushed price sharply higher. I was still willing to turn bullish near-term, had the reaction been maintained. It wasn’t, and I didn’t. The session-long decline attacked last year’s lows, with no reason to stop, let alone to recover.
When the influences of Friday’s expiration session had worn off, and Friday’s low had been retested, the market had a choice: bounce back into the range, or leave the range behind. It chose the latter. Bounces overnight have room up to 749’25-751’00 while still remaining on-track to probe new lows Tuesday. Above 752’00 would make a bigger bounce likely, and delay the inevitable probe of new lows.
The first day testing new lows won’t be this leg’s low. So, the first recovery attempt will be doomed to failure. Any recovery attempt this week would be suspicious.There is a growing likelihood for another 500+ point session loss, and delaying it with bounces would only refuel sellers for an even bigger, longer drop.
Indicators and Internals.
Including Monday’s last low, the intraday decline ignored three consecutive 3-minute RSI positive divergences. The last one’s timing might mitigate its significance somewhat. But the other two were pretty powerful, and the session was littered with broken supports. In other words, Monday’s sellers were motivated in ways that tend to precede bigger selling pressure coming down the pipeline. Delaying a bigger decline would mean the selling pressure had been diverted.
Tuesday’s opportunities.
Two retail sales reports are due pre-open. Consumer Confidence is reported 30 minutes after the open, timing that tends to accelerate or reverse trending already underway. Another thing that tends to affect trending is Congressional testimony by Fed Chairman Bernanke – got one of those two. The text of his opening remarks should be released shortly before Consumer Confidence numbers, so price action should be jumpy, and then get jumpier when the Q&A begins.[/pay]