Trading Plan for 3/26

Skipping a beat… While Thursday afternoon’s rally proved to be sponsored by weak hands, Friday morning’s sellers did not prove to be stronger hands. The first premise wasn’t proved until the following morning. Will stronger sellers appear Monday?

Pattern points… (Setups and technicals)[pay]
Buyers gained traction Friday by closing above the morning’s high in positive territory. That’s the cash session close, which equated to 1392.00. That’s not to say that the next move is up — the afternoon’s bias environment was entered at 1392.00.

The afternoon’s 1393.00 high represents the maximum retracement from Friday morning’s 1380.50 low back to the 1395.25 overnight high. That is, the maximum retracement without triggering a new buy signal. Holding its test as resistance suggests the next move will be back down. (Futures surging to close at 1394.50 does not count.)

There is an attraction above at the afternoon’s 1396.25 bias-up target. It is not “unfinished business” since it was produced by a late signal, but it still remains relevant. (Perhaps that’s why futures surged into the close.) And there is still the not-small matter of retesting Monday’s 1408.00 high up to at least 1410.25.

Oversold RSIs at Friday’s low require a retest of 1380.50. Presumably that would at least touch the morning’s invalidated 1379.50 bias-down target. An immediate drop Monday morning — preferably a gap down — would be optimal both for neutralizing the attraction below, and for starting the week with the slingshot stretched back. Otherwise, that unfinished business below would remain outstanding until after extending back to last week’s 1408.00 highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget about the Saturday Strategy Session at 9:30am ET. I’ll review the bigger picture, and offer instant analysis of your stock picks.[/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.