Trading Plan for 3/17

Loose lips can sink more than ships… Holding multiple tests of 1269.50 support had kept alive the potential for slightly higher highs. Blunt comments from an EU official blind-sided the market to basically repeat Sunday night’s exercise.[pay]

Pattern points… (Setups and technicals)
Tuesday afternoon’s Head & Shoulders made a probe of its 1283.75 high likely. Wednesday morning’s no-bias signal also created an objective above at 1283.00. The mid-morning 20-point plunge ended that detour. Those are not unfinished business above.

Meanwhile, there was unfinished business below at Tuesday’s 1256.00 opening gap and its 1251.00 overnight low. The 20-point plunge and its successor retested them down to 1243.25. Simultaneously oversold RSIs at the 1243.25 low require its retest (update: it was retested in early Globex trading).

With no unfinished business above, and an ongoing decline, perhaps only good news from Japan could avoid trending down Thursday. The next lower targets are 1238.00 and 1222.00. A corrective bounce would likely peak at either 1260.00 or 1270.00 before resuming the decline.

What’s Next… (Outlook and opportunities)
Gapping up Thursday would leave unfinished business below at Wednesday’s new low close. It could run higher, but it would not be a durable recovery. A bounce could test either 1260.00 or 1270.00 before a bigger corrective bounce were underway. Any durable bottom would require probing new lows intraday. And in real-time, that would resemble a new downleg, which it may very well be. [/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.