Trading Plan for 3/14
[pay]Pattern notes.
A quadruple top developed off of ESm 1324’25 during the half-hour that began at 2:00pm yesterday. Negative divergences among MACD & RSI signaled a pullback targeting 1315’50-1317’25 that was triggered at 1321’50. A drop to the target area was resolved by retesting the quadruple top one hour later, forming a larger double top. Another negative divergence signaled a pullback that fell overnight to 1302’00, where yesterday’s pattern narrowly avoided signaling a bias-down.
ESm 1302’00 wasn’t low enough, and despite bouncing since then to 1314’50 (if not because of it) lower lows are likely. There is room down to 1308’00-1309’00 before signaling the move to new lows is underway, confirmed under 1306’00. Currently the signal is being attacked by a 5-point drop off the bounce’s high. If lower lows aren’t signaled before first recovering 1311’50, or if the signal fails by then recovering 1311’50, yesterday’s tops – quadruple, double and otherwise – would likely be retested and probably broken.
Indicators and internals.
50% more NYSE up volume than down volume Thursday produced only 40% more advancing issues than decliners. This obligates Friday’s session to reward Thursday’s sellers for their relative productivity, and that seems to be in process overnight. Just like MACD & RSI at Thursday’s highs had signaled a drop, a positive divergence at the overnight low signaled a bounce. That bounce has been productive, and the buy signal requires no further fulfillment.
Friday’s opening setup.
The pullback from ESm 1314’50 is probing the 1308’00-1309’00 sell signal, but MACD & RSI are already oversold, so it’s a little suspicious being triggered before price could consolidate a little, and the 1306’00 confirmation is only more important. But it’s still be credible if triggered so long as its 1311’50 isn’t triggered, which in turn would be credible for resuming the recovery. CPI due one hour before the open should try to shake things up a bit. Consumer Sentiment is due 30 minutes after the open, timing that tends either to accelerate or to reverse any initial trending underway. This being a Friday, the morning’s bias signal is likely to persist well into the afternoon.[/pay]