Trading Plan for 3/24

[pay]Pattern notes.
Monday’s open gapped up above Friday afternoon’s last relative high. It’s the basis for a “session-long rally” setup, but this instance ran into more resistance than the setup normally tolerates. Buyers overcame the callenge, recovering back up to last week’s highs around 800’00. Buyers overcame a challenge here, as well, when its retest was rejected back under prior lows. Normally this setup would erase the entire session’s gain, but this instance recovered above 800’00 as the afternoon’s bias signal lapsed.

The afternoon’s last long-entry was literally dictated – taken grudgingly – and the rally never looked back before touching the 821’00-825’00 target’s lower-end. Slopes like Monday afternoon don’t produce a trend extreme. A pullback is likely, especially since the target area was met and held at session highs. Holding 809’50 would remain likely to recover for a higher high Tuesday. Under 804’00 would start to suggest a bigger pause underway.

Regardless, the market’s behavior remains in-line with a bear market rally. Record-setting gains notwithstanding, they are more normal in the context of a bounce’s end. This speaks to timing but not at any specific time, and Monday’s rally did give buyers traction that won’t be easily retaken. Tuesday’s session may yet prove worthy of playing from the short side, but Monday’s high should be retested at some point.

Indicators and Internals.
3-minute RSI was essentially overbought for the last 17 points of Monday’s rally, and Monday’s rally was strong through the cash session close. Both 1-minute and 3-minute RSIs were overbought at the ultimate high, increasing the vulnerability to a pullback, but also marking a level likely to be retested.

Tuesday’s opportunities.
An prime-time presidential address may inhibit trending, which would be bullish for also inhibiting a pullback from extending down. Upon retesting Monday’s high, the same influence may become bearish for inhibiting higher highs. The groundword for Monday’s rally was laid in the uncertainty fostered by last week’s FOMC surprise, and the week-ending two-day decline. PPIP’s details provided certainty. The only uknonwn details now are the various programs’ cumulative effect(s), and the main event is Tuesday night’s address.[/pay]