Trading Plan for 2/27

If a new high close on Friday can”t be a top… then Friday shouldn”t produce a new high close. Otherwise, the topping pattern we”ve been tracking isn”t valid.

Pattern points… (Setups and technicals)
The topping pattern that was warned Tuesday, and which was confirmed Wednesday, began tipping its hand Thursday. But it was mixed signals that still probably delay a downleg. 

The entire session was spent ranging in negative territory, it probed under prior lows, and it closed negative. That”s “ineffectual pessimism,” which often produces at least a temporary rally.

Also Thursday, the afternoon”s bias environment was exited under the noon hours low and the final hour was entered lower. Sellers gained traction, and should be rewarded by spending the morning under Thursday”s lows.

Each is problematic to the other. A fresh low here could extend down much more substantially — so much for overbought RSIs being retested at Wednesday”s high. Powering higher instead would prevent rewarding Thursday”s sellers.

What”s Next… (Outlook and opportunities)
Thursday”s sellers can be invalidated by maintaining a gap up above Thursday”s highs. Don”t feel sorry for them. They”ll be well rewarded after retesting Wednesday”s high. Otherwise, last week”s “lower prior highs” will be tested next.