Trading Plan for 3/22

The drop from Monday’s high… may have been sponsored by weak hands. It has not extended down in two days since then, but it has not been recovered. The weak-hand perspective has inhibited me from participating in most sell-offs, which was especially frustrating Wednesday. So, Thursday’s action should catch…

Pattern points… (Setups and technicals)[pay]
1395.25 support was ultimately tested Wednesday morning. And it held, which made the difference between maintaining the potential to retest Monday’s 1408.00 high. Despite recovering to repeatedly test 1401.00 resistance, a 4-point plunge prevented a “hold-long” through the close from being considered.

But the late plunge’s origin confined it to the session’s last 30 minutes. Timing suggests that its sponsorship was weak hands. So does the futures close, which extended down past the 1397.25 cash session close to touch 1396.00, and then bounce back to 1398.25.

Avoiding a break under 1395.25 also suggests the plunge’s sponsorship was weak hands, and another opportunity to refuel buyers. But the plunge did position the market where even the slightest weakness Thursday could break under 1395.25 to end the potential for fresh highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Rejecting Wednesday’s late plunge would help to confirm it was sponsored by weak hands. Immediately recovering or gapping up above 1400.50-1401.00 should suffice, preferably testing it as support after probing higher overnight. Otherwise, opening under 1395.25 would mean the dips since Sunday night have not been refueling buyers.[/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.