Trading Plan for 3/5

If the recent drop into Friday’s low refueled buyers… then does a retest of prior highs have potential to extend higher than was expected? Yes, but the two recent abrupt recoveries also suggest potential to reverse back down more abruptly once the rally ends.

Pattern points… (Setups and technicals)[pay]
Monday’s return back to Thursday’s late high essentially makes new highs only a formality. Reacting down first would likely recover, and extend to fresh highs — assuming the reaction down is relatively minor and brief. There is room down to “lower prior highs” at 1518.00 just as noise, normal backing-and-filling to refuel an upleg.

Under 1518.00 would find little remaining support before 1515.00. And almost any lower would start to return into the orbit of oversold RSIs at Monday’s 1510.50 low, perhaps even Friday’s 1499.50 low.

That’s all in case of initially dipping.

The likelier scenario is simply to extend higher without delay. A very late surge to fresh highs fulfilled Friday’s last “unfinished business above” at 1526.00. A retest of the recent 1530.00 high up to 1533.00 could easily be part of the same leg, so long as Tuesday’s open isn’t dipping on the way down to 1518.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The bigger picture remains vulnerable to resolving down with very little delay after probing new highs. Last week’s extra dip may have refueled enough to try extending higher for a second day, but beware the tenuousness of any fresh high.[/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.