Trading Plan for 2/29

Tuesday’s choppy session… wasn’t just a market with a split personality. It was a market that kept switching between its two personalities. Often, the winning personality isn’t the last one standing, but the last one hiding — keeping its energy in reserve.

Pattern points… (Setups and technicals)[pay]
The 1373.75 overnight high’s “new Globex trend extreme” was not retested intraday. The morning’s recovery to 1372.00 served as proxy for being a 61.8% retracement back into the range that produced it. A new downleg could have begun without leaving unfinished business above.

Then 1372.00 was retested in the afternoon. There was really no bearish reason for that, as the level had been retested already. It’s not quite bullish, as a downleg could still begin. But now a fresh high at or above 1374.00 is likely.

Gapping down or immediately dropping Wednesday under 1366.50 would suggest the last bounce to 1372.00 was only noise in the range. It would also trigger a “session-long decline,” free to extend back down to last week’s lows.

But the likelier scenario is a fresh high, whether is either reversed back into the 1366.00-1369.00 range again, or finally extends higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Very interesting flow of econ events Wednesday, including quarter-end window dressing and the LTRO announcement… Did I mention the potential for Wreversal Wednesday? Should provide a volatile session.[/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.