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Trading Plan for 2/28 – If, Then… Market Timing

Trading Plan for 2/28

By Rod David | February 27, 2013 - 5:16 pm

If Wednesday’s rally intends to retest last week’s highs… then the session’s steep, substantial rally can’t afford to dip too deeply before resuming the recovery.

Pattern points… (Setups and technicals)[pay]
Last week’s trend reversal needed to reassert itself no later than Wednesday’s open, or else the alternative was likely to retest last week’s highs. There was no hint of reversal as the open surged. Soon, any pullback would have been considered to be buyers refueling for the next leg up.

Interestingly, there was no pullback.

Nothing significant, at least. A 4-point dip from 1506.50 probed under its sell signal fewer than 3 minutes before reversing back up. The break was productive, but momentary, with hardly enough time to trap sellers. The next reaction down during the noon hour was a 3-1/2 point dip that held 1510.00 relevant support. It was no more accumulative despite lasting longer, since it was a noon hour event, and also since it triggered the bias-up.

A deeper and longer consolidation did form from the last half-hour’s consolidation around the 1518.25 objective up to 1519.25. Its break down to 1514.50 still didn’t qualify as a pullback because it happened into the close.

So, a lot of buying pressure has been satisfied very quickly by already fulfilling several upside objectives, all without yet really refueling buyers. Although the attraction back to the highs is still assumed to be intact, a little deeper dip first is probably necessary. Extending higher first, or dipping too deeply, could resume the decline.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday’s close AT the 1515.00 bias-up target may be “equilibrium.” That suggests Thursday morning’s first couple of trending attempts will be temporary, and reversed in the opposite direction. Equilibrium could be rendered moot by immediately trending far enough away from 1515.00 to break its attraction. [/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.

Posted in Market Wrap, S&P