Trading Plan for 3/13

If the WedEx indicator intends to be bullish… then Wednesday would need to rally sharply. That would be to trigger an actively bullish signal. A passively bullish setup isn’t available. But a couple of bearish setups are.

Pattern points… (Setups and technicals)[pay]
Despite gapping down at Tuesday’s to 1549.50, a reversal tested a fresh high at 1551.00. And despite reversing the open’s gap down, the probe of fresh highs was rejected by a deeper drop to test 1542.00. And that defined a Pivot Reversal setup, since the sequence developed in an uptrend.

The setup had its shortcomings, like shallowness and impatient timing. The shallowness stopped short of fulfilling the 1553.00 unfinished business above from Monday, and also only barely pierced prior highs. The impatience was more problematic.

Because the new high was rejected during the morning, the session closed above the noon hour’s low, testing its high. This is not typical of a Pivot Reversal. Instead, the setup usually reverses back down in the afternoon, trending entirely under the noon hour’s range. But Tuesday afternoon was spent ranging around the morning’s low, and not trending down.

All of the pattern’s shortcomings could be overcome by immediately extending down sharply Wednesday. That, or by rejecting another probe of fresh highs. Otherwise, we’ll consider sellers as being impatient, and therefore weak-handed.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Another Up/Down-Crash is forming. Its 10-11 period trending includes only 1-2 non-consecutive counter-trend sessions. Tuesday was the second counter-trend session. The setup has formed twice previously this year, and only identified a point of major hesitation, but no crash — up, down, or otherwise. Wednesday afternoon or Thursday morning would be the last opportunity for the pattern to be influential. [/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.