Trading Plan for 3/4

If gapping down under prior lows can’t scare away buyers… then buyers have their eyes set on new highs. They should be careful what they ask for. Absorbing Monday’s overnight plunge can expend a lot of buying pressure, potentially limiting their reward to only a slightly higher new high.

Pattern points… (Setups and technicals)[pay]
Closing under last week’s lows would reverse the trend down. Last Monday’s new high — which happened to be at the relevant 1856.50 target — was retraced down to 1837.25 during the week intraday, and down to 1832.75 Wednesday night. It was probed by Friday’s high

Both interim lows were tested intraday Monday. Both held. So, neither signaled that momentum is reversing down.

But not last week’s interim 1843.00 low close. Its support is relevant, too. It served as resistance intraday. Probing it repeatedly intraday was rejected, and hovering just under it before the close still failed to recover it. Being a trend reversal signal, closing under it signaled that the trend is reversing down.

It is only one signal, and the post-close surge probed back above it. So, I’m skeptical. Also, the signal was first tested at the open, and then probed considerably intraday. Just hovering under it at the close is far from decisive. Closing lower Tuesday would be entirely credible confirmation. Similarly, almost any initial rally attempt would be credible for extending higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
RSIs weren’t oversold at Monday’s 1832.25 lows, so no retest is required. That makes a retest likelier to be sponsored by strong hands, and likely to confirm Monday’s otherwise suspect trend change signal.[/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.