Trading Plan for 3/11

If Friday morning’s reversal intended to extend… then should it have done so by now? That afternoon only ranged sideways. And now Sunday night and Monday morning’s lower and lower lows have been recovered. Momentum hasn’t yet reversed up, so the vulnerability to a drop remains open — by default.

Pattern points… (Setups and technicals)[pay]
Monday’s sellers gained no traction for the efforts. Not for lack of trying. But the morning’s 11-point drop to 1865.75 was recovered back above the signals that had put it into play. That probed 2 points under the overnight low, which had itself probed under Friday’s lows, so not extending down makes the drop “ineffectual pessimism.”

Closing back above prior lows after probing under them isn’t the only factor for being labeled ineffectual pessimism. Monday’s open gapped down, and the entire session was spent in negative territory. Almost no more selling pressure could be expended and absorbed.

The afternoon upleg’s minimum objective was also its maximum objective, retesting the open’s 1877.25 high. It was tested as the position-squaring window began lapsing, and held. Any higher would have been likely to dip back 1873.00-1874.00, even in the most bullish scenario of recovering back to Friday’s 1887.50 pre-open high.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A pullback still has room down to 1873.00-1874.00 to keep its pessimism “ineffectual.” Opening any lower would be difficult to attract new sponsorship to resume the rally, risking a gap down under Monday afternoon’s 1870.00 low that would form a “session-long decline” setup. Opening much higher would leave the gap back to Monday’s close to attract price back down. [/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.