Trading Plan for 3/7

How sluggish was Tuesday’s decline?… Tuesday’s noon hour and afternoon bias environment — 12:00 – 2:30 — ranged almost entirely between 1341.00-1343.00. Just over 2 points wide. By then, S&Ps had fallen more than 20 points from Monday’s close…

Pattern points… (Setups and technicals)[pay]
That was only slightly narrower than the 1343.00-1347.00 range that ended just minutes prior to launching the next range. And it lasted longer than an hour. These sluggish intraday extensions of the overnight slide suggests that the decline’s sponsorship was not necessarily the intraday crowd.

A steeper intraday downleg could have extended the decline to provide a snap back up. At the opposite end of the spectrum, closing above a prior high could have allowed a rally to gain traction. However, while a shallow fresh low during the last 60-90 minutes did react up from 1338.50, it peaked upon testing the prior consolidation’s 1343.00 highs. Too little selling pressure, too little bounce.

So, the decline is vulnerable to extending down overnight. It is also vulnerable to completing overnight. Testing 1335.00 or 1330.00 and recovering to greet Wednesday’s open above 1343.00 could extend sharply higher intraday. With or without fresh lows overnight, greeting the open above 1347.00 could also bounce. Either bounce would be only corrective.

[/pay]What’s Next… (Outlook and opportunities)[pay]
An overnight bounce to 1347.00 could refuel sellers. A recovery attempt cannot just reach 1347.00, but must also exceed it through the open to avoid reacting down. Meanwhile, jobs reports start coming in, taking a high profile as Friday’s Employment Situation report nears.[/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.