Trading Plan for 3/25
[pay]About that close (How the prior session ended)
Wednesday afternoon’s ranging was ultimately narrow, largely contained by its 1162.75-1165.00 signals. Either end was probed, once, at inopportune times that are difficult to gain traction. The last half-hour attempted to trend up, but was unable to hold above the 1165.00 prior highs.
Pattern points (And technical influences)
Recovering the 1165.00 prior highs would have undermined the credibility of Wednesday’s sellers. This retraced all of Tuesday’s late breakout, confirming it was false. Closing any higher would have made the breakout likely to resume.
Which is not to say that momentum has reversed down. The open’s gap down held 1165.00 as support, instead gapping under it. The morning’s lower lows probed under overnight lows but didn’t extend down. And Tuesday afternoon’s low held as support despite repeatedly chipping away at its support.
The one thing missing from this rally has always been a close under prior relative lows. That’s why it’s still a rally. Not a prior day’s low, or a prior high, but a pullback’s low. The nearest such relevant low is 1150.00-1152.00, which would be targeted by closing under 1159.50 and 1157.50.
Otherwise, in the absence of decline, Tuesday’s 1169.50 close could be retested – this time not by proxy, but actually probing fresh highs up to 1172.25. Closing the same session back under 1165.00 would form the short-entry opportunity of the year. A new high close would instead give the rally what is now a much needed boost.
Bottom line (My underlying premise)
Jobless Claims is the day’s only high-profile econ report. And it will be history well before the open. Employment has been a more widely regarded than home sales activity as a measure of the economy, but it’s not necessarily different. That could be a problem, since home sales data as late as Wednesday morning was worsening again.
PROGRAMMING NOTE: Don’t forget that the Morning Market Tour will be almost one hour early Thursday, at 8:00am ET instead of at 8:55.[/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.