Trading Plan for 3/22

It’s all in the wrist… Or, in Monday’s case, it was all in the open. The balance of the session ranged narrowly, with few setups forming. At least gapping up for a second consecutive session isn’t likely to range narrowly again. And at least two intraday trending attempts Tuesday are likely.[pay]

Pattern points… (Setups and technicals)
Friday’s drop had to overcome a gap up. Monday’s gap up wasn’t overcome. If the gap was of any benefit, it was to help absorb selling. Except for surging predictably through the first 15 minutes of volatility, the balance of the session traded flat-to-lower.

But the gap up created unfinished business above, at Monday’s gap back to Friday’s ~1274.00 close. And the gap up tested more “higher prior lows” that can push back down, if not recovered aggressively without delay.

Not that sellers tried very hard to push back down Monday, but every attempt was ill-timed – either during a no-bias, or a bias-up environment. A substantial sell-off attempt at the wrong time could actually trap shorts. But not many shorts were trapped Monday.

No trapped shorts means no refueling. And gapping up Monday already expended a lot of energy, without much of a pullback since then. Extending the recovery attempt to the next open gap (highlighted red) would only exacerbate the problem.

What’s Next… (Outlook and opportunities)
An overnight dip to 1289.00 could be the next ill-timed sell-off attempt. The risk is it would be vulnerable to sliding much deeper, back into Friday’s range at 1281.00 or 1274.00. But opening flat to higher after recovering an overnight dip would extend the rally to 1301.00 and potentially 1312.00.[/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.