Trading Plan for 3/27

If Wednesday’s sellers were weak hands… then strong hands must be super patient. And if the rally intends to compensate for the delay, then it must intend to rally sharply.

Pattern points… (Setups and technicals)[pay]
Another day, another gap up. Another gap up, another failure. Have we been dead-on about the ongoing distribution up here (now more like “up there”), but got caught looking for one more new high that isn’t coming? That’s possible, but not yet indicated. And until that happens, there remains potential for one more new high.

Potential for new highs is kept alive by the drops not signaling trend reversals, but the drops certainly don’t make new highs any likelier. Reactions down from 1867.00-1874.00 create more room to absorb buying pressure without it gaining traction. By the same token, reacting down 27 points intraday from almost 1869.00, but not breaking the range’s lower-end, expends a lot of energy without sellers gaining traction for the effort.

Extending down immediately would target fresh lows — filling the gap back to the pre-Crimea invasion, back to the Sunday night low’s knee-jerk reaction, and lower to 1814.00. But gapping up Thursday above 1846.00 would help to confirm that Wednesday’s sellers were weak hands, ready to be retraced entirely.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping up above 1846.00 would be allowed only the briefest dip to 1844.00 before extending higher. That could be accomplished overnight, and gapping up above the last hour’s 1856.00 high would target Wednesday afternoon’s 1860.50 1:20 bias timing window print. Only 2-3 more dominoes would need to fall for new highs. Otherwise, not rejecting Wednesday’s drop would trend down.[/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.