Trading Plan for 2/28

Durable bottoms don’t start by gapping up… but corrective bounces do. So Friday’s gap up extended higher, correcting the week’s drop. Sellers barely interrupted, perhaps saving their energy for the coming week.

REMINDER: My weekly Open House is Saturday morning at 9:30am ET in the chartroom. Subscribers are welcome to invite guests. We’ll discuss the week’s patterns, and their meaning going forward. Time will be reserved for chart requests of any market or stock.  Here’s a link just for the event.[pay]

Pattern points… (Setups and technicals)
Multiple opportunities were missed for rejecting the open’s surge to resume the decline. Eventually sellers became marginalized for the afternoon. That didn’t necessarily empower buyers. The opposite of down isn’t up, it is “not down.” And buyers had not created any accumulation pattern. So, the afternoon was likelier to range flat than to trend up.

Indeed, the afternoon did range flat, instead of trending up, which proved that buyers hadn’t created any accumulation pattern.

The afternoon didn’t trade flat at some arbitrary level. It ranged around the 1318.50 target. It ranged around it for three hours. A reaction down would have been more appropriate for an ongoing rally – like Thursday’s last-minute dip. Treading water isn’t accumulation, either.

What’s Next… (Outlook and opportunities)
Regardless of Friday’s bounce not reversing down, I still consider the entire bounce from Thursday’s lows to be a correction. The context is last Tuesday’s trend change signal, and it can be retraced up to 1325.50-1327.00 without buyers gaining traction. Closing back above 1332.25 would suggest otherwise.[/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.