Trading Plan for 3/1
Now, that’s how to end a month. Gap up, probe highs and generally avoid negative territory without closing back above the morning’s highs. It’s called “ineffectual optimism.” Ramp it up into the close to squeeze the last drop of buying pressure out of the market, and then show them how to start a month the next day.[pay]
Pattern points… (Setups and technicals)
The morning’s high absorbed multiple probes above the 1327.00 target. And multiple sell signals triggered on the way down to 1319.25. The afternoon’s recovery ended at 1327.00 when the cash session closed. Despite then retesting the morning’s 1329.00 high, futures closed at 1326.00.
In short, 1327.00 held. Closing back under 1323.75 would have been bearish. Instead, failing to close above 1327.00 was not bullish.
Buyers didn’t gain traction for their efforts. Except for Monday’s last 5 minutes, the cash session almost closed under the 1325.25 pre-open high. Except for that last-minute surge, Monday’s buyers accomplished nothing that hadn’t been accomplished already pre-open.
Sellers did not gain traction, either. The bounce could still extend higher, by gapping up. Of course, after two days of up vs. three days down, extending any higher would all but require new highs before another drop could begin. So, the decline’s resumption would become very difficult if not underway Wednesday morning.
NQ’s barely probed fresh highs Monday. The balance of its day was spent fluctuating narrowly around unchanged. Speculation remains much more reserved. In any case, its underperformance undermines the credibility of the broader-based S&Ps rally.
What’s Next… (Outlook and opportunities)
Gapping down under 1320.00 would likely trend down sharply throughout the day. A slightly weaker open could still end lower, but probably not without first bouncing to fill the gap back to Monday’s 1326.00-1327.00 close. Maintaining a gap up would put into play 1334.50, and potentially new highs if not somehow rejected by noon. [/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.