Trading Plan for 3/21

The origin of Monday’s sell signal… determined its sponsorship was weak hands. That did not mean its break couldn’t be productive. As they say, once we had determined the break’s context, we were only haggling over price…

Pattern points… (Setups and technicals)[pay]
Weak-handed sellers can still be productive, they just can’t be durable. The drop from Monday’s high had all the indications of being sponsored by weak hands. That did not prevent it from extending down. Regardless of how far down the drop extended, its recovery was likely, because it was the product of weak hands.

The 1405.25 sell signal that triggered Monday afternoon had potential down to 1401.00. It extended to 1391.75. The signal’s extra productivity did not change its context. It’s not surprising that the extra drop was retraced entirely back to 1401.00.

No “hold-long” through the close was considered Tuesday since 1401.00 held as resistance. Even then, there is room for noise around 1401.00 up to 1402.25, and its recovery would have confirmed the recovery’s momentum remains intact.

The gap back to Monday’s 1404.25 close does not require being filled, since ti formed by gapping under a prior low. But it is the next attraction higher, on the way to 1310.25, so long as 1396.00-1397.50 holds as support.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s relentless trek higher keeps it vulnerable to being retraced, especially since its close held 1401.00 resistance. But a late dip did fail to gain traction, so the recovery is more vulnerable to extending higher. The shallowness of the recovery’s origin could make it difficult to maintain a retest of the 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.