Trading Plan for 3/30

Monday’s late sell-off was weak-handed… it’s timing gave it away. Tuesday’s new lows were weak-handed, which was hinted at by RSIs diverging positively. Neither was capable individually of launching a rally like Tuesday’s recovery, but together they were pretty productive. Now let’s see whether Tuesday’s recovery has accomplished anything, or just stretched things back the other way.[pay]

Pattern points… (Setups and technicals)
The cash session had just finished ticking higher and higher, tick-by-tick. I had just finished mentioning in the Market Wrap that it wasn’t accumulation, or noise. Had an individual stock been behaving that way, it would have reeked of manipulation. A 3-point spike up at the futures close was more of that behavior.

The 3:10-3:20 window had both probed and rejected a prior high, implying that the next rally effort would be final. If that last-minute spike up was it, then it has stretched the rubber band very tightly. Either it will snap back more forcefully, or else break higher sharply.

Breaking higher would target a retest of prior highs up to 1338.00, so long as sellers don’t retake control. Control that they lost through Tuesday afternoon.

What’s Next… (Outlook and opportunities)
Reversing down intraday from fresh highs at either 1321.00 or 1325.00 could resume the decline. Gapping down under the 1310.00 area could gain traction, as would closing under 1310.00. But gapping down Wednesday only back under 1314.25 – where Tuesday’s cash session closed – would be too little to reverse momentum 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.