Trading Plan for 3/27

If Tuesday morning’s rally weren’t blind-sided by an ominous headline about duplicating Cyprus confiscations to Spain and Italy… then an earlier probe of fresh highs would have had a likely resolution. Delaying the morning rally’s resumption until late-afternoon now allows Wednesday morning to have that same resolution.

Pattern points… (Setups and technicals)[pay]
Did a funny thing happen on the way to new highs? Monday’s close had failed to recover back above a prior high, which would have signaled the morning’s sellers were absorbed. That didn’t preclude Tuesday from attacking or retesting Monday’s 1560.50 pre-open high. That seemed to be the market’s intent.

Monday night’s narrow ranging above the afternoon’s 1549.00 highs reflected restrained optimism. The open didn’t delay surging through its 1550.50 signal. And the bias-up triggered easily. But the headline that prevented extending through 1556.00 shifted the market from offense to defense.

The balance of Tuesday’s session — until the final hour — was spent stair-stepping back up to retests of 1556.00. It wasn’t clear whether the “recovery” was from absorbing selling pressure, or just noise within the range. The morning’s highs were eventually probed, through its 1557.00 bias-up target.

Attacking or retesting Monday’s 1560.50 pre-open high Tuesday would have been likely to reverse price down sharply. There is still that vulnerability on Wednesday, from 1562.50 or 1565.00. Any higher could extend the rally into next week’s open.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A three-day holiday weekend is approaching. That makes Wednesday’s close predictive of trending into and out of the weekend. The timing is largely why a fresh high close Wednesday could be bullish through the weekend. Reacting down would not necessarily be bearish, but it would be a start. [/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.