Trading Plan for 3/19

If the six “strikes” described in yesterday’s Trading Plan were valid… then Sunday night’s plunge fulfilled them. Admittedly, Cyprus confiscating bank accounts never occurred to me. No further downside is required because of any residual effects from Friday. Now, any further downside must be the product of new price action from Monday. There isn’t six strikes, but there are two or three big ones…

Pattern points… (Setups and technicals)[pay]
The most bearish influence is the Up/Down-Crash indicator. It has been reflecting a very overbought condition that often resolves by reacting down sharply for multiple sessions. Any follow-through Tuesday would suggest that this setup’s down-crash is underway.

A second bearish influence is Monday’s close under last Tuesday’s 1546.75  prior low close. That would trigger a trend change signal. The cash session close wasn’t much lower at 1545.50, so this signal cries out for confirmation Tuesday.

Finally, the third bearish influence is similar to one of Friday’s strikes, which was a missed “ineffectual pessimism.” Gapping down, spending the entire session in negative territory and probing prior lows did NOT probe fresh lows during the afternoon. Recovering from that would have trapped shorts. Like Friday, buyers were impatient

[/pay]What’s Next… (Outlook and opportunities)[pay]
It’s not usually difficult separating knee-jerk headline reactions from valid breakouts, especially when the reactions resemble trends. Monday afternoon’s two reversals were examples. But if the bearish influences are valid, then no further bounce is likely. If the bearish influences are NOT valid, then Tuesday’s open should gap above Monday afternoon’s 1552.50 highs and extend higher. [/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.