Trading Plan for 3/25
[pay]Pattern notes.
Tuesday’s session gapped down to put 804’00 in jeopardy. The morning-long range never touched 804’00. Selling pressure was never very meaningful, and neither were the buyers that absorbed it. An afternoon bounce was quickly stopped upon testing targets up to 820’00, which pushed price back down into the range. A very late break finally probed 804’00 by nearly 3 points.
Although price had been under pressure for more than two hours prior from 820’00, the sudden last-minute 7-point plunge under 808’50 was not part of the same effort. Its break under 804’00 would have been overtly bearish if begun just 20 minutes earlier, which was trading at the same price level as 20 minutes later. This weekend’s Trading Plan notes that a breakout yet to happen should constantly be asked why it hasn’t. Monday’s last-minute break should be asked why it waited so long.
One reason may be that the timing undermined its credibility. A gap under 796’25 Wednesday is needed to confirm Tuesday’s last-minute selling was valid. The alternative likely open is a quick recovery above 809’50 that puts into play a retest of Monday’s 821’00 high, presumably including a test of 825’00.
Just gapping above 812’25 would signal a session-long rally. I suspect this won’t happen, or that a gap up will fail its challenge of a higher resistance. Failing to even attempt eitther would make a gap under 896’25 likely, which would almost single-handedly mean the bear market rally’s end.
Indicators and Internals.
RSIs were both oversold at Tuesday’s last-minute low. The simultanous reading increases the vulnerabilty to a bounce, just as Monday’s last-minute overbought sparked the overnight slide. The 3-minute RSI was at its most oversold at the price low, making it likely to be retested. Its highest overbought accompanied the cash sesion’s 820’00 high. Its retest would likely be met on the way to 825’00.
Wednesday’s opportunities.
Reaction to the primetime presidential address will be known overnight. I’ll make comments assessing the playing field then. Either Tuesday’s last-minute dive is a knee-jerk discount in case of bad news, or it knows something. News at 11.[/pay]