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Trading Plan for 3/1 – If, Then… Market Timing

Trading Plan for 3/1

By Rod David | February 28, 2013 - 5:20 pm

If Wednesday’s close was, in fact, at equilibrium… then it may be responsible for Thursday’s two intraday trending attempts. The noon hour’s rally was convincing, and so was the closing reversal down to new lows. I would have expected the equilibrium influence to develop much earlier, but perhaps the morning’s narrowing range delayed it.

Pattern points… (Setups and technicals)[pay]
Monday morning’s buyers found out quickly that 1524.25 was stiff resistance. The balance of that session trended down sharply. Thursday afternoon’s buyers found the air at 1524.25 to still be thin.

Thursday’s afternoon’s 6-point probe above 1518.00-1519.00, natural support of Wednesday’s intraday and overnight highs, turned into a round trip. Think of it as the market getting out of its comfort zone. Thursday’s pre-open dip under 1514.00 was the same mentality, to a lesser degree.

So, did Thursday’s late plunge to 1509.25 also get out of the comfort zone? At the relevant 3-minute mark before the cash session close, relevant support at 1517.00 was being tested. Gapping up back above it — and quickly extending through 1520.25 — should resume the rally to retest last week’s highs.

Thursday’s late plunge did hold critical support at 1511.00-1512.00, but there was no time to actually reject it. Extending down further to 1506.00 or even to 1502.00 to retrace more of Wednesday’s rally could still recover and resume the rally. But any lower would could find the weekend’s illiquidity forcing buyers and attracting sellers in.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Friday’s econ calendar is fairly weighty. It does NOT include the monthly NFP, but Bernanke is scheduled to speak. My preferred resolution to this pattern continues to be a retest of last week’s highs — if tested aggressively and early enough, the market should find the air to be even thinner. That said, I would still be prepared for a deeper open to simply extend and extend into the weekend. [/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