Trading Plan for 3/22

If Thursday’s sellers gained traction for their efforts… then no bounce is required before extending down Friday. So, not exiting the morning’s bias environment in decline could be bullish. Not rejecting a strong gap up could be bullish, too.

Pattern points… (Setups and technicals)[pay]
Thursday’s 1539.50 close was the lowest in three weeks. Two of this week’s sessions have traded lower –Sunday night down to 1529.50 and Tuesday down to 1532.00. Yet, two steep and sizable rallies since then haven’t been enough to avoid a new relative low close.

A “hold short” through Thursday’s close was avoided narrowly by closing and settling at the afternoon’s prior low, instead of below it. But the afternoon’s “V” bottom at 1536.50 requires a retest, not only because of its oversold RSIs. There isn’t much room above to absorb buyers unless another rally is underway, although not sizable at this stage of the pattern if it still intends to resolve down.

Thursday’s widening intraday dips, failed interim rallies, and its new low close aren’t very pretty. All suggest that more selling is coming, it is intent upon new relative lows, and that those new relative lows will be much lower.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday’s closing action trended down. But the afternoon’s 1544.50 high printed just into the final hour, disqualifying its recovery from triggering a session-long rally. That doesn’t mean gapping up above 1544.50 Friday wouldn’t be bullish, but its session would not necessarily end at its high point. Especially on a Friday, which doesn’t often tend into the close if the morning already trended. [/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.