Trading Plan for 3/20

If a new downleg is underway… then must it extend down without delay? Probably, at this stage. So, delaying lower lows would suggest a new downleg is not underway.

Pattern points… (Setups and technicals)[pay]
Monday’s borderline trend change signal cried out for validation from a lower close Tuesday. Just closing negative wouldn’t be good enough. At least Monday’s intraday low needed to be retraced, or attacked. In fact, it was probed, so was that good enough?

Maybe. Probing under Monday’s low without closing under it means those sellers were impatient, pushing lower without strong enough sponsorship to maintain the break. Just attacking the low would have been more bearish. Still, since Sunday night’s low was never probed, despite Tuesday’s low coming so close, sellers were a little patient.

But they had better regain traction immediately Wednesday. Tuesday afternoon’s fresh session low was recovered to close back above the noon hour’s high. A similar inverted setup undermined Monday’s buyers. And just as Monday’s buyers needed a gap up Tuesday to regain control, Tuesday’s sellers need a gap down to regain control Wednesday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping down under Tuesday afternoon’s last relative low at 1536.00 would signal momentum reversing back down, at least to probe under Tuesday’s 1532.00 low. But a gap down under the 1532.00 low would trigger a “session-long decline” that can do much more damage. Otherwise, opening Wednesday above 1546.00 — if not also above 1549.25-1550.00 — would put into play new highs. [/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.