Trading Plan for 2/25

If Monday morning’s rally had come Friday… then perhaps the bearish WedEX would have sent price down sharply today. Not that today was a success for the rally, having met its target at the high without putting higher targets into play.

Pattern points… (Setups and technicals)[pay]
The 1856.50 objective was first identified on December 26. The year-end attack wasn’t credible for extending higher, but that would have been the next higher objective (with potential to 1869.00).

1856.50 was actually put into play two weeks ago upon closing above 1818.00-1819.00. Confirming it the following day wasn’t any likelier to extend higher in a straight line. But correcting back down to 1818.00-1819.00 risked reversing momentum down.

The 1818.00-1819.00 pullback sneaked in overnight Wednesday when strong hands weren’t participating. Rallying to the 1856.50 objective was a straight line from there. Also a straight line? Monday’s reaction down from 1856.50 to 1847.00 before the cash session close, and 1842.00 after it.

Prior highs were still being attacked or tested as support at the close. Confirming Monday’s breakout with a second consecutive higher close is made difficult by Monday afternoon’s timing windows each probing the prior one. Fresh lows overnight would not be any likelier to extend down, but rallying first would be likely to resolve down in fresh lows.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The stand-in for this weekend’s Saturday Strategy Session was a bigger picture discussion held Monday morning in the Chartroom. It is linked here if you haven’t yet seen it.[/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.