Trading Plan for 3/16

[pay]Pattern notes.
Last week’s rally retraced all of the prior week’s loss. The score seems tied to those with selective or short memories. Actually, the prior week’s loss began when Feb 17’s open broke under multi-month lows. Lows that held through multiple months – seems like important support. And their ultimate break fell under all prior lows – seems like an important break. One up-week pales in comparison.

Thursday’s close deposited the market back above prior relative lows, within sight of prior relative highs. But the open’s optimism was utlized by absorbing sellers throughout the day. Had Friday’s close not recovered back into positive territory, the optimism could have been preserved for this week’s buyers. Optimism isn’t dead, yet, but could soon be missed sorely.

A two or three-week old break eventually produced the long-awaited retest of last year’s low. The bounce from that test’s low is now challenging last year’s low as resistance. Thursday’s close recovered it and Friday’s session held there. The recovery began after fulfilling important targets at the low, but that doesn’t mean a bull market is free to begin. Even a bear market rally is due its own corrections.

Indicators and Internals.
Technicals were already deteriorating or diverging negatively into Friday morning’s highs. The intrday dive fulfilled these readings and their selling pressure. Friday’s close completely retraced the intraday drop, so almost any hesitation at extending higher Monday would likely repeat the intraday dip.

Monday’s opportunities.
Last week’s bounce has more ground it can cover up to 763’00-764’00 or 774’00, another 8 or 16 points above Friday’s 755’00 close. Monday’s buyers could be helped by the magnetic attraction back to Friday’s 758’25 pre-open high. Immediately exploiting last week’s success is the quickest way to kill it, and an 8 or 16-point gain would likely squeeze out the last bit of optimism.

Back under 748’50 would target 744’00, and under 741’25 would target 737’00. Resuming last week’s bounce from there would still target only 763’00-764’00 or 774’00. Under 737’00 would target 723’00, and potentially refuel the bear market rally to or through 800’00. Under 723’00 would target a retest of the lows, an eventual requirement, but not currently required.[/pay]